ILLUMINATION Equity strategy and market outlook
June 2021
Published by Edison Investment Research
Contents
Global perspectives 2 Company profiles 7 Edison dividend list 66 Stock coverage 67
Prices at 18 June 2021 Published 24 June 2021 US$/£ exchange rate: 0.7099 NOK/£ exchange rate: 0.0846 €/£ exchange rate: 0.8593 CHF/£ exchange rate: 0.7858 C$/£ exchange rate: 0.5833 ZAR/£ exchange rate: 0.0514 A$/£ exchange rate: 0.5450 HUF/£ exchange rate: 0.0025 NZ$/£ exchange rate: 0.5076 KZT/£ exchange rate: 0017 SEK/£ exchange rate: 0.0849 JPY/£ exchange rate: 0.0065
Welcome to the June edition of Edison Insight. We now have c 400 companies under coverage, of
which 117 are profiled in this edition. Healthcare companies are covered separately in Edison Healthcare Insight. Click here to view the latest edition. This month we open with a strategy piece by Alastair George, who believes that last week, the US Fed
tipped its hand in respect of its tolerance for above-target inflation and its reaction function to the strong recovery in US GDP. In the days following the Fed meeting there has been a minor sell-off in global equity markets as Fed governors try to calibrate their new, more hawkish message. The advent of vaccines means that the COVID-19 pandemic is starting to be viewed by markets as a healthcare
problem that can be managed, rather than an economic crisis. Yet when institutional fund managers return to their offices after the summer, the headwinds of tighter monetary policy and shrinking COVID- 19 fiscal support in 2022 will be coming into view. By 2022 fiscal spending is forecast to contract in advanced economies, according to IMF projections. To maintain the growth momentum, fiscal spending will have to be replaced by private sector spending and investment. We remain neutral on equities. The outlook is balanced between a degree of overvaluation for developed markets in aggregate against the prospect of another year of very low interest rates and ongoing positive earnings momentum. As each month elapses however, the normalisation of monetary policy draws closer, most recently evidenced by
the hawkish turn in Fed policy. This month we have added BluGlass and Filtronic to the company profiles. Readers wishing for more detail should visit our website, where reports are freely available for download (www.edisongroup.com). All profit and earnings figures shown are normalised, excluding
amortisation of acquired intangibles, exceptional items and share-based payments. Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison is a registered investment adviser regulated by the state of New York. We welcome any comments/suggestions our readers may have. Neil Shah Director of research
Edison Insight | 24 June 2021 1
Global perspectives: US Fed tips hand Analyst Last week, the US Fed tipped its hand in respect of its tolerance for above- Alastair George target inflation and its reaction function to the strong recovery in US GDP. In +44 (0)20 3077 5700 the days following the Fed meeting there has been a minor sell-off in global equity [email protected]
markets as Fed governors try to calibrate their new more hawkish message.
At least until the recent change of tone from the US Fed, investors seemed to be ignoring the traditional maxim to sell – or at least reduce risk – at the sound of trumpets. The advent of vaccines means that the COVID-19 pandemic is starting to be viewed by markets as a healthcare problem that can be managed, rather than an economic crisis. Yet when institutional fund managers return to their offices after the summer, the headwinds of tighter monetary policy and shrinking COVID-19 fiscal support in 2022 will be coming into view.
Fiscal profligacy forecast to be reined in during 2022. By 2022 fiscal spending is forecast to contract in advanced economies, according to IMF projections. To maintain the growth momentum fiscal spending will have to be replaced by private sector spending and investment, which is not necessarily a seamless transition.
We remain neutral on equities. The outlook is balanced between a degree of overvaluation for developed markets in aggregate against the prospect of another year of very low interest rates and ongoing positive earnings momentum. As each month elapses however, the normalisation of monetary policy draws closer, most recently evidenced by the hawkish turn in Fed policy.
Edison Insight | 24 June 2021 2
Floodgates closing
Last week, the US Fed tipped its hand in respect of its tolerance for above-target inflation and its reaction function to the strong recovery in US GDP. We believed this moment was always due at some point during H221 – and only last month we wrote about the likely closing of the monetary floodgates as the global economic recovery gathered pace. In the ensuing days following the Fed meeting there has been a minor sell-off in global equity markets as Fed governors try to calibrate the new message.
Speaking to the press following the Federal Open Market Committee (FOMC) meeting, Fed Chair Powell retired the phrase ‘talking about talking about’ tapering US quantitative easing. The date of the tapering of the programme is now apparently under active discussion. Within the Fed’s Summary of Economic Projections, the date of lift-off of US interest rates has been brought forward to 2023. The tone of the Fed’s comments was relatively hawkish for investors accustomed to soothing noises from the institution, at least compared to since the start of the pandemic. In addition, the Fed’s inflation forecasts for 2021 have risen markedly, reflecting the surge in prices earlier in the year and forecasts for US growth have also risen modestly. These provide the impetus behind the change in outlook for the US Fed, which drove a brief risk-off period for markets and a 2% rise in the trade-weighted US dollar index.
Exhibit 1: FOMC ‘dot plot’ now indicates 2023 lift-off in US rates
0.7 0.6 0.5 0.4 plot projection % projection plot - 0.3 0.2
Median dot Median 0.1 0.0 2022 2023 March meeting June meeting
Source: Federal Open Market Committee We believe however that investors should not over-react to a development that should have been anticipated. We also note that the US Fed’s new raised inflation forecasts for 2021 should accommodate the relatively high inflation readings expected in coming months, lowering the likelihood of a further increase in the pace of policy tightening. This implies that gradualism remains firmly on the policy agenda.
In our view, the recent policy signal is not that the Fed is in now panic mode or ‘behind the curve’, nor that US rates will be raised pre-emptively or sharply to counter a short-term inflation threat. Instead, the slack on the chains on the floodgate doors has been taken up, positioning the Fed to react to faster than expected growth with higher rates, but it still retains the ability to pause, should economic growth ebb in the second half of the year. Both in the United States and other developed markets financial conditions remain loose and we note that 10-year yields, which are more relevant for equity valuations, were effectively unchanged on the US news.
Still favouring value sectors At least until the recent change of tone from the US Fed, investors seemed to be ignoring the traditional maxim to sell – or at least reduce risk – at the sound of trumpets. The advent of vaccines means that the COVID-19 pandemic is now starting to be viewed by markets as a healthcare
Edison Insight | 24 June 2021 3
problem that can be managed, rather than an economic crisis. Equity markets have risen strongly over the past six months and corporate credit spreads have shrunk to close to 20-year lows. Yet when institutional fund managers return to their offices after the summer, the headwinds of tighter monetary policy and shrinking COVID-19 fiscal support in 2022 will be coming into view.
We believe the period of above-average gains for risk assets such as equities and corporate credit may be behind us as risk premiums for equities and credit have more than recovered their COVID- 19 induced increase. For example, equity market price/book valuations are now in excess of long- term norms and the rate of upward earnings revisions has faded from the heady levels of earlier in the year.
Exhibit 2: Equity market valuations significantly ahead of long-term averages except for the UK
30% 20% 10% 0% -10% -20% -30% Premium to to average P/bk Premium -40% 2013 2014 2015 2016 2017 2018 2019 2020
Europe ex UK US UK
Source: Refinitiv, Edison Investment Research calculations. Note: Median FY2 price/book.
Normalisation of monetary and fiscal policy on the horizon for 2022 Diminishing economic uncertainty from COVID-19 should give rise to expectations of a normalisation of monetary and fiscal policy during 2022, absent the advent of a COVID variant that can escape current vaccines and derail the progress made in relaxing social restrictions. These expectations will have been reinforced recently with the disclosure that the Fed may have reached the limit of its appetite to stimulate the US economy, given the extent of the US recovery. For much of the pandemic, investors have maintained confidence in asset prices, due to the willingness of central banks and governments to run policy support at full bore to counter the impact of lockdowns on the economy and promote the conditions for a sustained and full recovery.
Early in the year, this was a quite logical reason to stay positive on equity markets even as valuations rose above long-term averages. This was even as the ‘peak’ global monetary impulse occurred much earlier in the pandemic, and as we have seen from recent Fed statements is arguably on the wane. However, although the timing of fiscal policy has a longer lag, the IMF forecasts that by 2022 fiscal spending will contract in advanced economies. Budget deficits are forecast to decline somewhat more rapidly than after the financial crisis of 2008 as COVID-19 emergency measures are phased out. To maintain the growth momentum fiscal spending will have to be replaced by private sector spending and investment, which is not necessarily a seamless transition.
Furthermore, now the crisis phase of the pandemic is over the traditional political divisions over fiscal policy have returned. For example, US President Biden’s infrastructure spending plan, initially slated as a $2.3trn package, now appears to be measured in US$ billions, as the original proposals met political roadblocks in the US Senate. Though a return to austerity seems unlikely, rising sovereign debt burdens mean that politicians are starting to pay more attention to fiscal sustainability as the pandemic recedes.
Edison Insight | 24 June 2021 4
Inflation uncertainty has risen but growth risk still paramount for equities Although there has been much discussion on the prospect of rapidly rising inflation, we believe growth risks remain paramount for equity investors at this time. While we would agree that recently sharply rising CPI inflation in developed markets creates short-term inflation uncertainty, we believe it is too early to have any confidence that this will be more than a temporary phenomenon.
Central banks in our view need to carefully parse the data to separate evidence of ‘inflation speculation’ from signals that could indicate structurally higher inflation. The highly transparent and inevitable disruptions to supply chains, as lockdowns have been imposed and released, have incentivised both investors and corporate buyers to pro-cyclically stockpile commodities, creating shortages. Inventory rebuilding is likely to be a significant contributor to recent commodity price inflation, which in any case now appears to be easing. For example, lumber prices in the US have fallen by more than 30% since their recent high. The time lags associated with shuttering and then restarting oil production suggests scope for a moderation in energy prices as supply progressively improves over the next 18 months.
Nevertheless, the qualitative argument that a greater degree of fiscal support for the economy may be expected over the coming decade, as green infrastructure initiatives put economies on the path to net-zero, might initially suggest a rather higher level of inflation and interest rates than investors have become accustomed to over the past 10 years, as former Fed Chair and current US Treasury Secretary Janet Yellen has highlighted. For a time, the pandemic pushed underwriting growth right to the top of the fiscal agenda for governments in developed markets.
However, we believe central banks will stick to the fiscal figures rather than the narrative. Advanced economy budget deficits as a percent of GDP are expected by the IMF to return to pre COVID-19 crisis levels by 2023, which suggests that increased talk of a greater role for fiscal policy outside the pandemic has yet to be turned into action. One exception perhaps is the EU’s COVID recovery fund which will turn the EU itself into a major bond issuing entity, rivalling member states, and represents a good example of not letting a crisis go to waste when in pursuit of a policy objective. Nevertheless, the broader fiscal picture is hardly suggestive of radical change. For investors, this indicates that monetary policy can be normalised gradually over time and in our view the risks to growth and inflation remain balanced.
Exhibit 3: ‘Peak stimulus’ in advanced economies
25% 20% 15% 10% 5% % GDP 0% -5% -10% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Budget deficit Change in government expenditure
Source: International Monetary Fund forecasts, Edison Investment Research calculations As policy settings are normalised and economic life returns to business as usual, we believe investors may have less tolerance for other exceptions, such as sectors trading outside historical valuation norms. As a result, we believe the outperformance of value, cyclical and ‘real economy’ stocks is likely to continue during the second half of 2021 despite the recent bump in the road from the US Fed.
Edison Insight | 24 June 2021 5
However, the inevitable slowing of the extraordinary rate of current economic expansion may time- limit this trade to H221, should valuations converge. In recent weeks, positive earnings momentum for developed markets has eased back from the blistering pace set in H121 to more typical (but still positive) rates, which is likely to moderate the pace of equity market returns.
Exhibit 4: Upward earnings revisions have moderated in recent weeks
150.0
140.0
130.0
120.0
110.0 Index level Index 100.0
90.0
80.0 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21
UK US Europe ex UK Emerging
Source: Refinitiv, Edison Investment Research calculations
Conclusion
We remain neutral on equities, balancing a degree of overvaluation for developed markets in aggregate against the prospect of another year of very low interest rates and ongoing positive earnings momentum. As each month elapses however, the normalisation of monetary policy draws closer as evidenced by the recent hawkish turn in Fed policy.
Sitting still can be hard to do. However, the promise of vaccines in developed markets has become a reality and COVID-19 uncertainty is receding. There is good evidence now that the current range of vaccines are effective in preventing hospital admissions, even for the new variants of the virus. As developed markets continue to recover, we remain positive on the value sectors of the stock market, especially in the context of still very low bond yields.
However, this is within a neutral view for global equities due to relatively high valuations for the growth segments of the market. We believe it is too early to declare that inflation is running out of control as the recent data are likely to be highly distorted by the inventory cycle and investor behaviour. Instead, for our portfolio positioning we would be more focused on the risk of a growth slowdown in 2022 as emergency fiscal packages are withdrawn and growth becomes more reliant on private sector consumption and investment.
Edison Insight | 24 June 2021 6
Sector: Technology 1Spatial (SPA) Price: 42.5p Market cap: £47m INVESTMENT SUMMARY Market AIM 1Spatial’s recent AGM statement (23 June) highlights that orders for new sales are up year-on-year so far and refers to a ‘strong and growing pipeline in all regions’, suggesting Share price graph (p) momentum was sustained in May and most of June. As management is expecting growth and our forecasts include a rise in sales in FY22, we make no changes at this point. However, we continue to see scope for an increase in forecasts if momentum continues.
INDUSTRY OUTLOOK
The GIS industry is large and growing. P&S Market Research estimates the global GIS software, services and hardware market generates sales of US$9.0bn annually and will grow at a 10% CAGR to reach annual sales of US$17.5bn by 2023.
Company description 1Spatial’s core technology validates, rectifies and enhances customers’ geospatial data. The combination of its software and advisory services reduces the need for costly manual checking and correcting of data.
Y/E Jan Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (2.3) (14.1) 66.7 2020 23.4 3.2 0.8 0.58 73.3 81.9 Relative* (2.2) (17.1) 43.7 2021 24.6 3.6 0.3 0.18 236.1 12.2 * % Relative to local index Analyst 2022e 25.6 3.7 0.4 0.26 163.5 9.6 Dan Gardiner 2023e 27.2 4.2 0.8 0.53 80.2 9.3
Sector: Technology 4iG (4IG) Price: HUF630.00 Market cap: HUF59220m INVESTMENT SUMMARY Market Budapest stock exchange 4iG has continued to execute at pace, focused on three pillars: IT services; telecoms services; and space and defence. The group has announced a series of acquisitions that Share price graph (HUF) will transform the group, culminating with DIGI Group (a leading Hungarian telecoms services provider) and Spacecom (a listed Israeli satellite operator), both set to close in H221. On a pro forma basis, these businesses look set to generate run-rate EBITDA of HUF88bn (c US$300m). Both DIGI Group and Spacecom are transformational deals for 4iG, but we will only update our estimates once the deals complete.
INDUSTRY OUTLOOK
Management anticipates continuing consolidation-driven growth, with organic growth supplemented by market share gains and accelerating market consolidation. It is positioning Company description the group to benefit from high-demand new technologies including digitalisation, blockchain, 4iG is one of the leading IT services deep learning, artificial intelligence, industry 4.0, cyber security and fintech. and systems integrators in Hungary, working with public sector clients, large corporates and SMEs. Management is focused on becoming the market leader in Hungary by FY22 as well as targeting expansion in Central and Eastern Europe. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (HUFbn) (HUFbn) (HUFbn) (HUF) (x) (x) % 1m 3m 12m Actual 4.5 0.3 (3.1) 2019 41.1 4.1 3.3 31.54 20.0 N/A Relative* (0.4) (7.3) (24.5) 2020 57.3 5.0 4.2 37.17 16.9 N/A * % Relative to local index Analyst 2021e 82.7 8.9 7.3 59.16 10.6 N/A Richard Williamson 2022e 93.0 9.9 8.9 72.41 8.7 N/A
Edison Insight | 24 June 2021 7 Sector: Media 4imprint Group (FOUR) Price: 2790.0p Market cap: £784m INVESTMENT SUMMARY Market LSE 4imprint’s May AGM statement indicated improving momentum in its order intake as the US economy reopens. Having lifted our forecast numbers initially in March, we raised our FY21 Share price graph (p) revenue projection from $645m to $700m and our FY22e revenue by 6% to $765m. The operating margin is also on a recovering trend. In FY21, we expect the group to put further funds into marketing spend to benefit from a strengthening trading backdrop, constraining the recovery in operating margin. Thereafter we anticipate margins reverting towards historical levels. The balance sheet remains strong, with end April net cash of $44m.
INDUSTRY OUTLOOK
The Advertising Specialty Institute (ASI), an industry body, estimated the value of the US promotional products distribution market in 2020 at US$20.7bn, down 20% on prior year, Company description after an extended period of growth at a 10-year CAGR of 5.0%. However, the FY20 figure 4imprint is the leading direct marketer includes US$6bn of PPE sales, without which sales would have fallen by 43% year-on-year. of promotional products in the United States, Canada, the UK and Ireland. In Notwithstanding its market-leading position, 4imprint’s share is therefore less than 3% FY20, 98% of revenues were (3.6% excluding PPE). generated in the United States and Canada.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 9.6 22.9 7.3 2019 860.8 59.1 55.6 157.2 25.0 19.6 Relative* 9.8 18.6 (7.5) 2020 560.0 8.4 5.0 13.8 284.8 150.3 * % Relative to local index Analyst 2021e 700.0 24.9 21.1 58.5 67.2 48.1 Fiona Orford-Williams 2022e 765.0 35.1 31.4 86.9 45.2 35.8
Sector: General industrials AAC Clyde Space (AAC) Price: SEK2.72 Market cap: SEK506m INVESTMENT SUMMARY Market Nasdaq FN Premier AAC Clyde Space is at the forefront of the rapidly growing and innovative market for small satellites. As nanosatellite build rates and deployments rise sharply over the next decade, Share price graph (SEK) increasing systems and platform sales should be surpassed by growing services revenue. Management is navigating the growth phase and targeting opportunities in New Space to extend AAC's reach, capabilities and technologies. Recent deals enhance profit and cash generation and support the SEK500m 2024 revenue goal. Order intake remains strong, notably the c SEK55m order from Horizon Technologies for two 6U satellites for maritime awareness and tracking data that could lead to additional orders.
INDUSTRY OUTLOOK
AAC Clyde Space has a strong space heritage in small and nanosatellites. Over the next Company description five years around 3,000 nanosatellites should be launched as technology development Headquartered in Sweden, AAC Clyde extends the applications for low earth orbit (LEO) constellations, especially for Space is a world leader in nanosatellite end-to-end solutions, subsystems, communications. AAC Clyde Space has operations in Glasgow, Sweden, Holland and the platforms, services and components, United States and is developing its 'Satellite Data as a Service' offering, as well as sales of including supply to third parties. It has production and development subsystems to third-party satellite providers. operations in Sweden, Scotland, the Netherlands and the United States. Y/E Dec Net Sales EBITDA PBT EPS (fd) P/E P/CF Price performance (SEKm) (SEKm) (SEKm) (öre) (x) (x) % 1m 3m 12m Actual 19.1 (5.1) (27.2) 2019 66.4 (27.3) (38.2) (44.55) N/A N/A Relative* 17.6 (10.1) (48.2) 2020 98.4 (17.5) (26.7) (25.79) N/A N/A * % Relative to local index Analyst 2021e 217.8 7.2 (3.8) (2.00) N/A 140.2 Andy Chambers 2022e 293.0 25.6 16.5 8.00 34.0 20.0
Edison Insight | 24 June 2021 8 Sector: General industrials Accsys Technologies (AXS) Price: 159.0p Market cap: £305m INVESTMENT SUMMARY Market LSE A year end update noted strong H2 sales growth – after a small H1 COVID-19 related dip – resulting in FY21 revenue progress of c 9%. Accoya wood volumes (+ c4%) and associated Share price graph (p) revenues have been firm with the Arnhem plant operating at capacity, supporting a sustained gross margin improvement. Expansion via a fourth reactor at Arnhem is on track for delivery by the end of FY22 while the new Hull/Tricoya plant is in the final stages of construction and management expects full operational ramp-up to commence in H222. Accsys ended FY21 with €12.5m net debt. The FY21 results (22 June) will tell us more about plans to establish a new Accoya facility in the United States and the expected completion of the Hull/Tricoya facility. Our estimates are under review.
INDUSTRY OUTLOOK
Company description Accsys has a technically proven process and wide international market acceptance for its Accsys Technologies is a chemical modified wood output. As well as successful capex execution, the sales and marketing technology company focused on the development and commercialisation of challenge is to pull through demand to absorb newly available capacity and develop licence a range of transformational partners. Management has previously stated long-term market potential of 1m m3 pa of technologies based on the acetylation of solid wood and wood elements for Accoya wood and 1.6m+ m3 of Tricoya panel products. use as high performance, environmentally sustainable construction materials. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 2.9 (4.4) 101.5 2019 75.2 0.9 (6.2) (0.38) N/A N/A Relative* 3.1 (7.8) 73.7 2020 90.9 7.0 (2.2) (0.08) N/A 111.0 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Toby Thorrington 2022e N/A N/A N/A N/A N/A N/A
Sector: Mining Alkane Resources (ALK) Price: A$1.10 Market cap: A$655m INVESTMENT SUMMARY Market ASX Production at Tomingley in Q221 and Q321 were both materially above our expectations and caused Alkane to increase its guidance (for the second time this year) for FY21 from Share price graph (A$) 47–52koz to 50–55koz at a reduced AISC of A$1,400–1,550/oz (cf A$1,450–1,600/oz previously). At the same time, Alkane has delineated material new resources at Tomingley's San Antonio and Roswell extensions leading to an extension of the mine's operational life from CY23 until at least CY31 at higher levels of production (eg up to 115koz pa) and lower levels of cost (eg AISC of A$1,350–1,450/oz) than currently.
INDUSTRY OUTLOOK
Prior to the announcement of the extension of Tomingley's life on 3 June, our most recent valuation of Alkane attributed 21c/share in value to Tomingley plus net cash (A$30.1m as at Company description end-Q321). To this was then added up to 27c for its Roswell and San Antonio resources Alkane Resources is an Australian plus up to a further 67c from contingent assets such as Boda and 10c from other production and development company. It previously produced 70,000oz of investments. These are now in the process of being updated. gold per year from the open-pit operations at its Tomingley gold mine, but is transitioning to underground operations and expects to produce c 47,500oz in FY21. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual 25.7 46.7 19.6 2019 94.0 33.0 25.4 4.57 24.1 15.3 Relative* 20.4 34.7 (5.1) 2020 72.5 29.4 20.6 2.56 43.0 21.4 * % Relative to local index Analyst 2021e 104.2 34.8 22.9 2.89 38.1 28.9 Charles Gibson 2022e 125.3 41.4 26.3 3.31 33.2 19.6
Edison Insight | 24 June 2021 9 Sector: Technology Allied Minds (ALM) Price: 21.5p Market cap: £52m INVESTMENT SUMMARY Market LSE The April capital markets day provided further visibility on Allied Minds’ portfolio. OcuTerra subsequently confirmed a successful funding round (adding c 2p to NAV/s), but FY21 Share price graph (p) funding rounds are also anticipated for Federated Wireless, BridgeComm, Spin Memory and Spark Insights. Given limited cash resources (FY20: US$22.3m parent-level net cash), Allied Minds will need to be cautious about its level of funding support for future rounds. Pending positive funding news, we maintained the value of Spin Memory and Spark Insights at zero in our latest estimated adjusted NAV per share of 42.5p as at 31 December 2020.
INDUSTRY OUTLOOK
COVID-19 fears have abated, with sustained tech valuations and amidst a robust funding environment. Investors have preferred stocks that demonstrate portfolio progress and offer Company description the potential for meaningful exits in a realistic timeframe and upside potential. Consistency Allied Minds is a technology of NAV performance, capital preservation, realisations and exits are the key metrics by investment company with a concentrated portfolio focused on which to judge success. early-stage spin-outs from US federal government laboratories and universities.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (2.3) (21.3) (38.6) 2019 2.7 (47.2) 49.5 20.97 1.4 N/A Relative* (2.1) (24.0) (47.1) 2020 0.5 (12.9) (54.5) (21.49) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Richard Williamson 2022e N/A N/A N/A N/A N/A N/A
Sector: Mining Alphamin Resources (AFM) Price: C$0.63 Market cap: C$750m INVESTMENT SUMMARY Market JSE , TSX-V Alphamin offers rare exposure to immediate positive cash flow from a metal that both Rio Tinto and MIT regard as being the most likely to benefit from the widespread electrification Share price graph (C$) of the world economy. Fortuitously, its Bisie tin mine in the north-eastern Democratic Republic of the Congo (DRC) is hitting its stride at just the moment that the tin price is experiencing its biggest squeeze in decades, providing it with a golden opportunity to repay debt and even consider making distributions to shareholders as early as next year.
INDUSTRY OUTLOOK
At a tin price of US$29,815/t, we estimate a value for Alphamin of 61.5 US (or 74.3 Canadian) cents per share. At a long-term tin price of US$23,425/t, we estimate a value for Alphamin of 42.4 US (or 51.2 Canadian) cents per share. However, this rises to as high as Company description C$1.162/share in the event that exploration expands and/or extends the life of operations Alphamin Resources owns (84.14%) (see 12 March, 14 May and 8 June exploration updates). NB Q121 results were absolutely and operates the Mpama North tin mine in the North Kivu province of the consistent with these expectations. DRC with a grade of c 4.5% Sn (the world’s highest). Accounting for c 4% of the world’s mined supply, it is the second largest tin mine in the world outside China and Indonesia. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (20.3) 0.0 250.0 2019 27.2 8.5 (5.8) 0.8 64.7 N/A Relative* (22.2) (5.8) 170.9 2020 187.4 58.3 15.7 (1.1) N/A 30.3 * % Relative to local index Analyst 2021e 318.0 180.7 148.6 8.9 5.8 5.6 Charles Gibson 2022e 271.0 140.9 114.9 7.4 7.0 5.2
Edison Insight | 24 June 2021 10 Sector: Technology Applied Graphene Materials (AGM) Price: 28.0p Market cap: £18m INVESTMENT SUMMARY Market AIM Applied Graphene’s (AGM’s) H121 results show the beneficial impact of the management’s decision announced in October 2019 to focus on supplying customers in the protective Share price graph (p) coatings market with graphene nanoplatelets in easy-to-use dispersions. Revenues grew by 20% year-on-year, albeit from a low base, and adjusted EBITDA losses narrowed by £0.3m to £1.6m. Management estimates that the £5.5m (net) raised in January has extended the company’s cash runway well into calendar 2023, enabling it to convert the current opportunity pipeline totalling £3.7m (after applying a probability of success factor) into meaningful annual revenues during the period.
INDUSTRY OUTLOOK
UK-based Tru-Tension has recently launched a bike detailing spray enhanced with AGM's Company description graphene nanoplatelet technology. Following a programme of in-house research and Applied Graphene Materials (AGM) testing, Tru-Tension states that its new spray offers a high gloss finish that acts as a develops graphene dispersions that customers use to enhance the protective layer to leave paintwork glistening and reduces dirt build-up to make future properties of coatings, composites and cleaning easier. This latest product launch represents another example of how the functional materials. It also manufactures high-purity graphene incorporation of AGM's unique graphene dispersion technology can transform customers' nanoplatelets using a proprietary process based on sustainable, readily products and help manufacturers to stand out in the car and bike care market. available raw materials instead of Y/E Jul Revenue EBITDA PBT EPS (fd) P/E P/CF graphite. Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (17.7) (34.1) 55.6 2019 0.1 (4.6) (4.8) (7.9) N/A N/A Relative* (17.5) (36.4) 34.1 2020 0.1 (3.1) (3.5) (6.1) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Sector: Financials Appreciate Group (APP) Price: 38.7p Market cap: £72m INVESTMENT SUMMARY Market AIM APP will report FY21 results on 29 June. In a recent trading update it said that FY21 underlying PBT will be in line with market expectations of £4.1–4.8m, excluding c £3.0m of Share price graph (p) non-recurring costs related to the ongoing strategic repositioning, but including a similar amount of profit deferral due to slower customer redemptions. H221 performance was driven by strong corporate demand, increased sales of higher margin digital product, and previous restructuring actions. Total group billings for the year were £406.5m (FY20: £419.9m), including £23m generated by the low margin, non-recurring free school meal initiative. 'Underlying billings' within the corporate business and HSV continued to stabilise, down 8% for the year (H121: down 40%). Less positively, the current year Christmas Savings order book is expected to be c 11% lower, primarily due to restricted face-to-face agent activity during the lockdown. Under a new partnership agreement, PayPoint will offer Company description APP’s gifting product to consumers via its 28,000 partner stores. Appreciate Group is a specialised financial services business and is the INDUSTRY OUTLOOK UK’s leading provider of multi-retailer redemption products. Consumers can The market is estimated at c £6bn by the UK Gift Card & Voucher Association, and is access products directly through its market-leading Christmas Savings fragmented, providing significant opportunities for market share growth. offering while corporate customers use these products to supply a range of incentive and reward products. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.5 0.5 13.8 2019 110.4 12.3 12.5 5.4 7.2 10.4 Relative* 0.7 (3.0) (1.9) 2020 112.7 11.7 11.4 4.9 7.9 10.4 * % Relative to local index Analyst 2021e 93.9 6.4 4.5 2.3 16.8 11.1 Martyn King 2022e 103.4 9.2 7.2 3.1 12.5 N/A
Edison Insight | 24 June 2021 11 Sector: General industrials ArborGen Holdings (ARB) Price: NZ$0.21 Market cap: NZ$107m INVESTMENT SUMMARY Market NZSX ArborGen’s FY21 results were US$1m ahead of our expectations at the US GAAP EBITDA level (at US$8.1m after central costs, which was above FY20’s US$7.7m comparable) but Share price graph (NZ$) slightly lower at the PBT level including lower R&D and other adjustments. The United States in particular – and South America to a lesser extent – showed some revenue impact from the COVID-19 pandemic but underlying operations are strengthening through investment, self-help actions and growing availability of higher value seeds which are expected to facilitate a ramp up in seedling sales and revenue growth in future periods.
INDUSTRY OUTLOOK
Prior to the COVID-19 outbreak, the economic growth outlook in each of its core countries, the United States, Brazil, New Zealand and Australia, was either good or improving, Company description according to OECD data. At this point, the primary end-markets served by its plantation ArborGen Holdings (formerly Rubicon) forestry customer base (ie construction and the pulp and paper industries) were in a positive is an NZX-listed investment company. Its subsidiary ArborGen is the world’s cyclical phase. largest integrated developer, commercial manufacturer and supplier of advanced forestry seedlings with operations in the United States, Brazil and Australasia. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 20.1 29.5 25.0 2020 56.9 7.7 6.0 1.4 10.7 15.6 Relative* 19.3 29.5 14.4 2021 52.7 8.1 8.9 1.9 7.9 7.6 * % Relative to local index Analyst 2022e 62.1 12.0 12.1 2.4 6.3 5.8 Toby Thorrington 2023e 69.3 13.4 12.9 2.6 5.8 5.7
Sector: Travel & leisure Aspire Global (ASPIRE) Price: SEK60.90 Market cap: SEK2830m INVESTMENT SUMMARY Market Nasdaq FN Premier Aspire Global’s Q121 results highlighted strong broad-based organic revenue growth (+35.6% y-o-y) complemented by improving sequential growth from recent M&A, which led Share price graph (SEK) to an impressive expansion in EBITDA margin (+230bp y-o-y to 17.8%). Through Q121, AG’s enhanced and more integrated offering enabled it to execute well on its strategy of expanding to more regulated markets, attracting new customers and growing sales to existing partners. We upgraded our FY21 and FY22 revenue and EBITDA forecasts by 4%.
INDUSTRY OUTLOOK
AG is exposed to favourable growth trends. First, the online gaming market is enjoying structural growth due to increasing global wealth, internet/mobile penetration and regulation. The geographic markets to which AG currently has some exposure are forecast to grow Company description gross gaming revenue (GGR; ie customer wagers less their winnings) from US$37.6bn in Aspire Global is a leading B2B 2019 to US$69.1bn by 2025 (source: H2 Gambling Capital). Secondly, online gaming provider of iGaming solutions, offering partners all relevant products to markets are highly competitive with differing levels of regulation. These combine to make operate a successful iGaming brand. It the operation of an online gaming brand challenging, particularly when working across many also owns/offers B2C online gaming brands, including Karamba. Aspire geographies. operates in 26 regulated markets across Europe, the United States, South America and Africa. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (5.6) 7.0 148.6 2019 131.4 21.7 17.9 32.7 18.4 61.5 Relative* (6.8) 1.4 76.8 2020 161.9 27.1 18.4 32.6 18.5 9.4 * % Relative to local index Analyst 2021e 195.6 34.1 30.1 55.3 10.9 8.0 Russell Pointon 2022e 220.4 40.1 33.2 63.7 9.4 7.1
Edison Insight | 24 June 2021 12 Sector: Mining Auriant Mining (AUR) Price: SEK4.43 Market cap: SEK438m INVESTMENT SUMMARY Market NASDAQ OMX First North Auriant’s Tardan plant has now been re-modelled to a single carbon-in-leach process. This has resulted in a c 40pp increase in metallurgical recoveries and a c 25% reduction in cash Share price graph (SEK) costs to US$676/oz cf its previous heap leach operation, which resulted in a c 4x increase in EBITDA and a c 3x increase in operational cash flows in FY20 cf FY19. Currently, it is in the process of completing a definitive feasibility study on Kara-Beldyr and, combined, the two mines are expected to achieve management’s goal of 3t (96.5koz) of gold output pa in c FY25. Confirmatory drilling is also underway with a view to accelerating the development of Solcocon.
INDUSTRY OUTLOOK
Q121 pre-tax profit was 3.5% above our prior forecast and Auriant has now repaid all of its Company description high cost debt. Assuming that it raises US$20m in equity (NB Subject to the gold price and Auriant Mining is a Swedish junior gold cash flows and could be less) at a share price of SEK4.70, we value Auriant at mining company focused on Russia. It has two producing mines (Tardan and US$1.72/share. In the meantime, it is trading on a multiple of only c 4x FY21 earnings. Solcocon), one advanced exploration property (Kara-Beldyr) and one early stage exploration property (Uzhunzhul).
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (4.8) (13.1) 4.2 2019 29.8 7.2 (2.2) (1.3) N/A 5.7 Relative* (6.1) (17.7) (25.9) 2020 53.4 31.2 16.6 13.7 3.9 2.0 * % Relative to local index Analyst 2021e 52.7 26.8 15.8 13.4 4.0 2.2 Charles Gibson 2022e 55.6 35.0 23.8 13.5 3.9 2.1
Sector: Aerospace & defence Avon Rubber (AVON) Price: 2664.0p Market cap: £826m INVESTMENT SUMMARY Market LSE Avon is delivering on its growth strategy focused on organically growing its core, supported by selective product development and value-enhancing M&A. It is renaming to Avon Share price graph (p) Protection in H221, now the sole focus. The US acquisitions in 2020 extended the product portfolio and deepened customer engagement. Despite lockdowns, adverse FX and ballistic protection contract delays, H121 revenues grew 41%. Military (+17%) and First Responder (+19%) were driven by respiratory products and Team Wendy added $20.5m. Order intake was strong and H121 net debt was just $13m. Management expects to meet FY21 analyst consensus and we maintain our estimates for FY21 and FY22.
INDUSTRY OUTLOOK
Avon's long-standing, multi-level relationship with the US DoD is important to the group and Company description the end market backdrop is supportive. The focus on higher-price sophisticated mask Avon Rubber designs, develops and systems is proving successful, with M50 mask system replenishment and the addition of manufactures personal protection products for Military and First helmets and body armour provides further opportunities. We believe that Avon has the Responder markets. Its main market position, product portfolio and strategic ambition to continue its growth through customers are national security agencies such as the US DOD and c organic and inorganic means. 90% of sales are from the United States. Y/E Sep Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (13.9) (18.2) (12.8) 2019 162.0 36.2 28.3 84.9 44.2 130.1 Relative* (13.8) (21.0) (24.8) 2020 213.6 52.3 36.0 96.2 39.0 N/A * % Relative to local index Analyst 2021e 284.9 63.2 48.1 125.6 29.9 34.0 Andy Chambers 2022e 362.0 88.2 69.4 181.1 20.7 13.7
Edison Insight | 24 June 2021 13 Sector: Travel & leisure bet-at-home (ACXX) Price: €39.55 Market cap: €278m INVESTMENT SUMMARY Market Xetra The Q121 results were strong in the context of management guidance for FY21. Trading in the early part of FY21 is likely to be as bad as it gets for BAH. The initial (negative) effects Share price graph (€) of regulatory changes in Germany will be followed by a more favourable sporting calendar and management’s belief that increased legal certainty from Q321 will help the company to better plan and develop its business. We upgraded our FY21 EBITDA forecast by 11%, taking it above management’s re-iterated guidance.
INDUSTRY OUTLOOK
According to H2 Gambling Capital, the European online sports betting and gaming market is expected to grow 7.4% CAGR between 2019 and 2024. BAH operates mainly in 'grey' markets (no formal regulation but not illegal), which are characterised by strong cash flow, Company description but also carry commensurately higher regulatory risks. Its main market, Germany, is Founded in 1999, bet-at-home is an becoming fully regulated in FY21. online sports betting and gaming company with c 300 employees. It is licensed in Malta and headquartered in Dusseldorf, Germany. Since 2009 bet-at-home has been part of Betclic Everest, a privately owned French online gaming company. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (12.1) (9.1) (0.9) 2019 143.3 35.2 33.1 425.53 9.3 9.3 Relative* (12.5) (13.0) (21.2) 2020 126.9 30.9 28.8 331.92 11.9 15.3 * % Relative to local index Analyst 2021e 118.0 23.5 21.4 248.01 15.9 14.4 Russell Pointon 2022e 129.8 28.8 26.7 309.60 12.8 11.6
Sector: Technology BluGlass (BLG) Price: A$0.04 Market cap: A$36m INVESTMENT SUMMARY Market ASX BluGlass has pivoted its innovative compound semiconductor manufacturing technology onto the development of high performance laser diodes which it intends to start shipping at Share price graph (A$) scale over the coming year. Entering the laser diode market represents a route for BluGlass to grow revenues much more rapidly. Based on industry sources, management estimates that the global laser diode market will grow from A$369m in CY21 to A$849m in CY26, driven by demand for lasers in industrial, display, biotech, scientific and lighting markets. Management’s goal is to capture 8% of the laser diode market by calendar year 2026, potentially generating almost A$75m revenues annually.
INDUSTRY OUTLOOK
Noting a delay to the laser diode product launch related to third-party production steps, Company description BluGlass is raising up to $8.0m through a private placing of $2.0m and non-renounceable BluGlass is an Australian technology rights issue of up to $6.0m, both at $0.03/share, to provide a cash runway through to initial company that is developing and commercialising a breakthrough customer revenues. compound semiconductor technology for the production of high efficiency devices such as laser diodes, light emitting diodes (LEDs) and micro-LEDs. Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual (33.5) (55.4) 8.3 2019 0.4 (5.1) (5.1) (1.21) N/A N/A Relative* (36.4) (59.0) (14.1) 2020 0.7 (3.6) (4.8) (1.01) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 14 Sector: Technology Boku (BOKU) Price: 166.0p Market cap: £488m INVESTMENT SUMMARY Market AIM Boku reported strong results for FY20, with adjusted revenue and EBITDA growth of 20% and 106% respectively. Trading year to date has been strong for both businesses and Share price graph (p) management is confident of meeting expectations for FY21. The evolution of the platform to address the wider alternative payments market provides upside potential to our forecasts and the share price. Boku recently announced a mobile identity partnership with French carriers, increasing the addressable market for its identity services.
INDUSTRY OUTLOOK
Direct carrier billing (DCB) is an alternative payment method that uses a consumer’s mobile bill as the means to pay for digital content or services such as games, music or apps. Boku is the dominant DCB player, serving the largest merchants such as Apple, Sony, Facebook, Company description Spotify and Netflix, and is expanding into alternative payment methods such as digital Boku operates a billing and identity wallets. Boku's identity verification service enables merchants to sign up and transact with verification platform that connects merchants with mobile network users while meeting regulatory requirements and avoiding fraud. operators in more than 80 countries. It has c 300 employees, with its main offices in the United States, the UK, Estonia, Germany and India.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 2.2 (2.9) 67.7 2019 50.1 10.7 4.1 1.20 194.9 N/A Relative* 2.3 (6.3) 44.5 2020 56.4 15.3 11.0 3.21 72.8 N/A * % Relative to local index Analyst 2021e 66.5 17.7 12.2 3.15 74.2 N/A Katherine Thompson 2022e 77.8 21.0 15.1 3.87 60.4 N/A
Sector: Travel & leisure Borussia Dortmund (BVB) Price: €6.48 Market cap: €596m INVESTMENT SUMMARY Market FRA Borussia Dortmund’s Q321 results reflected ongoing cost control, while COVID-19 continued to affect attendance-related revenues. The team’s late surge to finish third in the Share price graph (€) Bundesliga, and more silverware by winning the DFB-Pokal, ensured a pleasing end to a challenging year. Subsequent to the results release, management finessed its financial guidance for FY21, incorporating unbudgeted success in the DFB-Pokal and better performance (quarter finalists) in the Champions League versus FY20 (Round of 16). Guidance is EBITDA of €33m (€25–30m previously) and a net loss of €75m (€70–75m). We increased our FY22 EBITDA forecast by 33% to reflect a more positive outlook for attendance at matches given the roll-out of COVID vaccines.
INDUSTRY OUTLOOK
Company description Unsustainable spend on wages and transfers is increasingly being penalised by UEFA The group operates Borussia Financial Fair Play requirements. A 'break-even requirement' obliges clubs to spend no Dortmund, a leading football club, placed third in the Bundesliga in more than they generate over a rolling three-year period. Sanctions vary from a warning to a 2020/21, DFB Super Cup winners in ban from UEFA competition, fines and a cap on wages and squad size. 2019/20, and DFB-Pokal winners in 2020/21. The club has qualified for the Champions League in nine of the last 10 seasons. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 1.3 11.1 5.1 2019 370.3 116.0 101.5 87.95 7.4 19.8 Relative* 0.9 6.3 (16.4) 2020 370.2 63.0 45.6 46.77 13.9 201.1 * % Relative to local index Analyst 2021e 335.2 32.3 16.1 17.50 37.0 135.3 Russell Pointon 2022e 369.9 80.8 63.9 62.47 10.4 30.0
Edison Insight | 24 June 2021 15 Sector: Oil & gas Brooge Energy (BROG) Price: US$8.75 Market cap: US$959m INVESTMENT SUMMARY Market NASDAQ Brooge Energy (BROG) is an independent oil and refined oil products storage and service provider located in the Port of Fujairah, in the UAE. The company is initially developing its Share price graph (US$) terminal’s storage capacity in phases and differentiates itself from competitors by providing fast order processing times and high accuracy blending services with low oil losses using the latest technology. Phase I has been operational since 2017 and Phase II is expected to start in mid-2021. The company is preparing to raise equity capital for its Phase III, and this will increase oil storage capacity by 3.5x once operational (2023). In Q221 BROG renewed contracts for 58% of its Phase I storage capacity at a 70% premium to the starting fixed lease storage price of H120 contracts, as it benefitted from high oil storage demand. The low demand for ancillary services among new customers had a negative effect on revenue in FY20 and may also affect revenue in FY21. Our valuation currently stands at Company description $10.3/share. Brooge Energy is an oil storage and service provider strategically located in INDUSTRY OUTLOOK the Port of Fujairah in the United Arab Emirates (UAE). Current storage The COVID-19 pandemic highlighted the importance of oil storage infrastructure and the capacity stands at 399,324m3 and will be increased by 602,064m3 once vital role the business plays in the logistics and trading of crude oil and refined oil products. Phase II is completed.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (3.8) (13.5) (9.1) 2019 44.0 37.0 (75.0) (85.5) N/A 14.5 Relative* (4.7) (18.7) (32.1) 2020 42.0 29.0 17.0 19.5 44.9 20.8 * % Relative to local index Analyst 2021e 68.0 54.0 29.0 26.4 33.1 24.6 Marta Szudzichowska 2022e 130.0 112.0 88.0 80.0 10.9 9.4
Sector: Oil & gas Canacol Energy (CNE) Price: C$3.29 Market cap: C$591m INVESTMENT SUMMARY Market TSX Canacol offers investors a pure play on the Colombian natural gas market where it holds a c 20% market share of national demand. With gas export capacity now in place, it is focusing Share price graph (C$) on converting its 5.7tcf of net unrisked prospective resource into reserves (up 1tcf vs 2019), with its 2021 exploration capex the largest in its history. In 2020, Canacol replaced 61.9bcf of production with 75bcf of reserves (a reserves replacement ratio (RRR) of 122%). It is targeting a RRR of 200% in 2021. Up to 12 wells are planned this year at an estimated cost of c $66m, along with a substantial 655km2 3D seismic programme. The most recent well, Aguas Vivas 1, encountered the thickest net pay yet of 412ft. The historical success rate of over 80% underpinned by AVO analysis of 3D seismic keeps risks low, while the planned capex and cash dividends are covered by Canacol’s existing cash and cash generation. We currently value Canacol at a core NAV of C$3.62/share and a RENAV of C$5.87/share. Company description INDUSTRY OUTLOOK Canacol Energy is a natural gas exploration and production company primarily focused on Colombia. The Colombian, Caribbean Coast gas market is expected to move into gas deficit in the absence of LNG imports, incremental piped gas or the development of recent deepwater discoveries. Canacol sells gas under long-term, fixed-price gas contracts, typically of five to 10 years’ duration with inflation clauses to protect cash flows. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 1.2 (8.9) (11.1) 2019 219.5 162.8 64.7 19.21 14.1 4.4 Relative* (1.3) (14.2) (31.2) 2020 246.8 184.6 79.8 (1.27) N/A 3.2 * % Relative to local index Analyst 2021e 228.4 187.2 85.7 29.92 9.0 3.1 Ian McLelland 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 16 Sector: General industrials Carr's Group (CARR) Price: 137.0p Market cap: £128m INVESTMENT SUMMARY Market LSE Carr’s Group reported a 5% rise in adjusted operating profit during H121. Strong performances from both the Speciality Agriculture and Agricultural Supplies divisions more Share price graph (p) than compensated for weaker demand from the oil and gas market, which adversely affected the Engineering division. However, the Engineering order book is strengthening with contracts from the nuclear and defence markets, so management expects a second half divisional recovery and its expectations for FY21 group performance are unchanged.
INDUSTRY OUTLOOK
Noting the strong performance from the agricultural activities during H121, which management expects to continue during the second half, we have raised divisional estimates slightly but increased central costs, leaving FY21 adjusted PBT and EPS broadly Company description unchanged. Incoming CEO Hugh Pelham’s strategic review maintains the direction of all Carr's Group's Agriculture divisions three divisions, while accelerating and intensifying programmes to improve internal serve farmers in the North of England, South Wales, the Welsh Borders and processes and thus profitability. Scotland, the US, Germany, Canada and New Zealand. The Engineering division offers remote handling equipment and fabrications to the global nuclear and oil and gas industries. Y/E Aug Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (9.3) 7.9 24.6 2019 403.9 23.8 18.0 14.2 9.6 9.2 Relative* (9.2) 4.1 7.4 2020 395.6 23.4 14.9 11.8 11.6 6.5 * % Relative to local index Analyst 2021e 433.2 23.6 15.4 12.0 11.4 5.2 Anne Margaret Crow 2022e 447.0 24.7 16.5 12.7 10.8 7.7
Sector: Financials Cenkos Securities (CNKS) Price: 82.0p Market cap: £46m INVESTMENT SUMMARY Market AIM In its 12 May AGM statement Cenkos confirmed that it had continued to trade well and in line with its own expectations. This followed 2020 when its revenue increased 23% to Share price graph (p) £31.9m and it raised £0.9bn (vs £0.7bn) for clients, including four IPOs. New CEO Julian Morse and executive board member Jeremy Osler (co-head of corporate finance) took up their positions following the AGM. The group’s strategy is to focus on entrepreneurial growth companies and investment trusts, forming deep, long-term relationships with clients.
INDUSTRY OUTLOOK
On outlook, the company noted that its pipeline provides confidence for the rest of the year, subject to the market background. With approaching 100 corporate clients and a strong balance sheet (end-2020 cash £32.7m and surplus capital over pillar 1 of £14.5m) it is well Company description placed to deliver on its strategy. Cenkos is a leading UK securities business, which acts as nominated advisor, sponsor, broker and financial adviser to companies, focusing on entrepreneurial growth companies and investment trusts. Since inception in 2005 it has raised more than £20bn in equity capital for corporate clients, which stood at 94 at end December Y/E Dec Revenue EBITDA PBT EPS P/E P/CF 2020. Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.2) 22.4 65.7 2019 25.9 0.4 0.1 0.1 820.0 N/A Relative* (1.1) 18.1 42.8 2020 31.9 2.6 2.3 3.3 24.8 7.4 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Andrew Mitchell 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 17 Sector: Media Centaur Media (CAU) Price: 41.0p Market cap: £60m INVESTMENT SUMMARY Market LSE Q1 trading was reported in line, in what is generally the quietest quarter for revenues with no scheduled events or Mini MBA courses, and cash at end February was £8.2m (IFRS Share price graph (p) liabilities only). The Spring Mini MBAs are now running and the next courses are scheduled for Q3, while a new MD takes the reins at The Lawyer in August tasked with driving revenue and margin growth. Centaur is reinstating dividend payments and has now paid a final of 0.5p for FY20, with a minimum payment of 1.0p set out for future years. Centaur’s MAP23 strategy, laid out in January, gives the framework and impetus for revenue growth and improving profitability, which should in turn drive an increasing valuation.
INDUSTRY OUTLOOK
The pandemic-accelerated disruption to the marketing sector should provide a fertile Company description backdrop for demand for B2B market intelligence, with a greater propensity for clients to Centaur Media is an international adopt digital solutions, albeit on a slower sales conversion cycle, provided they deliver provider of business information, training and specialist consultancy for greater efficiencies. Forecasts from the major commentators for FY21 global ad spend the marketing and legal professions. growth are being revised upwards, further supporting the trading environment. Its Xeim and The Lawyer business units serve the marketing and legal sectors respectively and, across both, offer customers a wide range of products and services targeted at Y/E Dec Revenue EBITDA PBT EPS P/E P/CF helping them add value. Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (2.4) 3.8 64.0 2019 39.6 4.0 (1.5) (1.4) N/A 12.5 Relative* (2.3) 0.2 41.4 2020 32.4 3.8 (0.3) 0.2 205.0 28.1 * % Relative to local index Analyst 2021e 36.2 5.1 1.2 0.6 68.3 11.6 Fiona Orford-Williams 2022e 41.5 7.6 3.6 2.0 20.5 8.0
Sector: Technology CentralNic Group (CNIC) Price: 84.0p Market cap: £211m INVESTMENT SUMMARY Market AIM CentralNic delivered 16% Q121 LTM pro forma revenue growth, with all of its businesses contributing. Monetisation has been rebranded Online Marketing, with revenues increasing Share price graph (p) 76% to US$45.3m (54% of Q121 group sales), making it the fastest-growing segment. As expected, with the growth of Online Marketing, adjusted EBITDA margins softened from 14.4% in Q120 to 12.0% in Q121. CentralNic made two acquisitions in Q121, SafeBrands (online brand protection) and Wando Internet Solutions (online marketing), funded by a €15m bond placing. CentralNic is trading in line with management’s expectations and the pipeline of future deals remains strong.
INDUSTRY OUTLOOK
CentralNic supplies the tools needed for businesses to develop their online presence, Company description providing domain names, hosting, websites, email, security certification, brand protection CentralNic is a leading provider of and marketing. It delivers services to c 40m domains, with cross-selling and upselling global domain name services, operating through three divisions: important drivers of future growth – organic growth is supported by M&A. Indirect, Direct and Monetisation. Services include domain name reselling, hosting, website building, security certification and website monetisation. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 2.2 (1.2) (2.3) 2019 109.2 17.9 16.1 9.24 12.8 N/A Relative* 2.3 (4.6) (15.8) 2020 241.2 30.6 19.8 10.57 11.2 N/A * % Relative to local index Analyst 2021e 323.4 39.5 26.7 9.93 11.9 N/A Richard Williamson 2022e 350.0 43.7 30.1 10.94 10.8 N/A
Edison Insight | 24 June 2021 18 Sector: Technology Checkit (CKT) Price: 60.5p Market cap: £38m INVESTMENT SUMMARY Market AIM Checkit reported 23% y-o-y revenue growth for Q122. Normalising for the acquisition of Checkit US at the start of the quarter, group revenue increased 15% y-o-y. Recurring Share price graph (p) revenue made up 35% of total revenue, up from 32% in Q121 (normalised), as Checkit continues to transition customers to subscription contracts. Q122 annual recurring revenue grew 7% q-o-q and, while early in the year, is on track to meet our 34% growth target for FY22. Simon Greenman was recently appointed non-executive director, bringing experience in technology, including AI.
INDUSTRY OUTLOOK
With its workflow management software, Checkit is focused on connecting and empowering deskless mobile workers who are not able to use desktop software in their day-to-day Company description working environment. Only a small proportion of the current enterprise software market is Checkit optimises the performance of designed for this group of workers. Checkit’s sweet spot is supporting workers who perform people, processes and physical assets with connected digital solutions. It is a combination of routine tasks and infrequent but important tasks where the volume and headquartered in Cambridge, UK and variety of tasks is such that it is difficult to build a targeted application. has its operations centre in Fleet, UK.
Y/E Jan Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (0.8) 21.0 70.4 2020 9.8 (4.9) (6.4) (4.0) N/A N/A Relative* (0.7) 16.8 46.9 2021 13.2 (2.5) (3.1) (5.2) N/A N/A * % Relative to local index Analyst 2022e 15.2 (3.9) (4.5) (7.2) N/A N/A Katherine Thompson 2023e 17.8 (2.0) (2.7) (4.3) N/A N/A
Sector: Financials Civitas Social Housing (CSH) Price: 118.6p Market cap: £738m INVESTMENT SUMMARY Market LSE The Q421 trading update ahead of FY21 results on 30 June showed CSH continuing to perform in line with expectations, with no COVID-19 impact on rent collections or property Share price graph (p) valuations and continuing to deliver consistent positive returns. Aggregate FY21 DPS of 5.4p was in line with the target, fully covered on an annualised run-rate basis by EPRA earnings. The DPS target for FY22 is 5.55p, a 2.8% increase and ahead of recent CPI inflation. End-FY21 IFRS NAV/share was 108.3p (end-FY20: 107.9p) and including DPS the FY21 NAV total return was 5.4%. Gearing is in place for further accretive growth including plans to address the need for accommodation and support for the homeless. Most recently CSH acquired a portfolio of 10 immediately income generating supported living properties for a total consideration of £8.6m (excluding purchase costs).
INDUSTRY OUTLOOK Company description Civitas is the leading listed UK social Private capital is crucial in meeting the current and future needs for care based social housing REIT. Its investment objective is to provide an attractive level of housing which is widely recognised to improve lives in a cost-effective manner compared income, with the potential for capital with the alternatives of residential care or hospitals. growth, from investing in a diversified portfolio of fully developed social homes, particularly specialist supported housing for vulnerable adults. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.5 8.4 9.0 2019 35.7 26.1 19.9 3.6 32.9 21.6 Relative* 0.7 4.6 (6.0) 2020 45.9 36.0 37.7 4.6 25.8 22.4 * % Relative to local index Analyst 2021e 48.5 38.7 36.3 4.9 24.2 16.6 Martyn King 2022e 54.2 44.6 51.4 5.6 21.2 16.4
Edison Insight | 24 June 2021 19 Sector: Technology Claranova (CLA) Price: €7.14 Market cap: €284m INVESTMENT SUMMARY Market Euronext Paris Claranova reported 31% y-o-y revenue growth for Q321, or 30% on an organic, constant currency (cc) basis. PlanetArt saw growth accelerate to 45% (42% organic, cc), helped by Share price graph (€) the successful integration of Personal Creations and subsequent launch of FreePrints Gifts in the US. Avanquest returned to growth having completed the transition to subscription licensing. We have revised our forecasts to reflect Q3 results, with a small upgrade to revenue and EBITDA in both years.
INDUSTRY OUTLOOK
PlanetArt is evolving from a digital photo printing business into a personalised e-commerce business and is focused on expanding its product offering geographically. Avanquest, the consumer software business, is focused on developing and marketing software in three key Company description product areas: PDF, photo editing and security/privacy. The IoT business's myDevices Claranova consists of three platform provides a simple and effective way for SMEs and corporates to deploy IoT businesses focused on mobile and internet technologies: PlanetArt (digital applications. photo printing; personalised gifts), Avanquest (consumer software) and myDevices (internet of things (IoT)).
Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (1.7) 7.4 25.3 2019 262.3 16.0 12.0 25.1 28.4 92.8 Relative* (4.6) (0.2) (4.7) 2020 409.1 20.6 11.3 20.4 35.0 9.3 * % Relative to local index Analyst 2021e 483.4 40.1 29.6 47.4 15.1 9.8 Katherine Thompson 2022e 569.9 45.5 35.9 54.3 13.1 6.6
Sector: Aerospace & defence Cohort (CHRT) Price: 604.0p Market cap: £248m INVESTMENT SUMMARY Market AIM Cohort's defence and security orientation has proven resilient during the pandemic. The FY21 closing update confirmed management expects to meet estimates of slightly higher Share price graph (p) FY21 operating profits. The major impact of the pandemic has been to defer some order awards to FY22 and FY23, mainly at EID, reducing its FY22 revenues and margins. A record £210m group order intake was still achieved. The £240m FY21 backlog provides 63% cover of FY22 consensus sales which are unchanged as the other divisions including ELAC compensate with stronger trading, but are unable to fully cover the profit shortfall. As a result our FY22 adjusted PBT is marginally above FY21.
INDUSTRY OUTLOOK
Cohort is heavily influenced by activities in defence and security (90% of FY20 sales). Company description These markets require highly differentiated technologies and services with high barriers to Cohort is an AIM-listed defence and entry based on customer relationships, regulation and high-level security clearances. security company operating across six divisions: MASS (31% of FY20 sales), Defence is generally quite resilient in periods of significant economic disruption and the SEA (24%), MCL (11%), 80%-owned £4bn pa increase in the UK defence budget announced in November 2020 appears to EID (14%), 81%-owned Chess Technologies (19%) and newly mitigate concerns over imminent budget constraints. acquired ELAC SONAR.
Y/E Apr Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (8.4) (2.7) 9.8 2019 121.2 17.3 15.9 33.6 18.0 21.2 Relative* (8.2) (6.1) (5.4) 2020 131.1 20.9 17.5 37.1 16.3 18.9 * % Relative to local index Analyst 2021e 142.1 21.4 17.7 33.6 18.0 11.3 Andy Chambers 2022e 158.7 21.6 17.7 33.7 17.9 23.2
Edison Insight | 24 June 2021 20 Sector: Property Custodian REIT (CREI) Price: 98.7p Market cap: £415m INVESTMENT SUMMARY Market LSE Although key elements of the FY21 results had been previously disclosed, the detailed annual report included additional details on a robust performance, particularly in H2, and Share price graph (p) prospects. H221 rent collection strengthened, DPS increased, and asset values recovered, delivering positive total return of 0.9% for the year. Rent collection for the year was 91%, including net of contractual rent deferrals (2%), and strengthened during the year to support and increase in H2 DPS to 3.0p versus 2.0p in H1 (an aggregate 5.0p versus 6.65p in FY20). The board targets FY22 DPS of at least 5.0p while maintaining full cover. We continue to forecast aggregate FY22 DPS of 5.6p, supported by a further improvement in rent collection and improvement in occupancy as the lockdown eases.
INDUSTRY OUTLOOK
Company description The commercial property market is cyclical, historically exhibiting substantial swings in CREI is a London Main Market-listed capital values through cycles while income returns have been more stable. The pandemic REIT focused on commercial property in the UK outside London. It is and Brexit have created significant economic and market uncertainty during the past year, income-focused, with a commitment to but GDP is forecast to rebound strongly as the lockdown eases and interest rates remain pay a high but sustainable and covered dividend. low maintain a significant commercial property yield premium.
Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.2 7.6 5.2 2020 38.1 33.4 28.7 7.0 14.1 13.0 Relative* 0.3 3.9 (9.3) 2021 33.1 28.5 23.7 5.6 17.6 17.4 * % Relative to local index Analyst 2022e 35.6 30.9 25.8 6.1 16.2 13.9 Martyn King 2023e 37.2 32.4 27.3 6.5 15.2 12.9
Sector: Technology Datatec (DTCJ) Price: ZAR27.50 Market cap: ZAR5540m INVESTMENT SUMMARY Market JSE Datatec’s IT services arm, Logicalis, has acquired Siticom, an engineering consultancy based in Germany with specialist expertise in enterprise 5G systems integration, including Share price graph (ZAR) next-generation public and private networks and internet of things implementation. As well as strengthening Logicalis in Europe, the acquisition immediately makes it one of the few ITC groups with expertise in 5G systems integration. Siticom will form the basis for a European hub for advanced networking integration around 5G and cloud-based network interoperability. Siticom has 130 staff and historic revenues of c US$24m. The consideration was not disclosed.
INDUSTRY OUTLOOK
As the global economy recovers, with robust European and Asian demand, we expect Company description Datatec to continue to benefit from the streamlining of its operations and cost base, with Datatec is a South Africa-listed progressive margin improvement at Logicalis and improving profitability at Westcon. multinational ICT business, serving clients globally, predominantly in the Semiconductor supply remains a supply chain concern for the entire technology sector. networking and telecoms sectors. The group operates through three main divisions: Westcon International (distribution); Logicalis (IT services); and Analysys Mason (consulting). Y/E Feb Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (7.1) (5.8) 7.6 2020 4214.4 158.7 79.1 10.59 18.8 2.3 Relative* (4.8) (4.2) (11.5) 2021 4109.5 118.6 73.1 6.75 29.5 2.3 * % Relative to local index Analyst 2022e 4316.5 163.1 79.1 16.61 12.0 4.2 Richard Williamson 2023e 4548.5 185.3 101.6 25.19 7.9 4.0
Edison Insight | 24 June 2021 21 Sector: Media Dentsu Group (4324) Price: ¥3885.00 Market cap: ¥1120472m INVESTMENT SUMMARY Market TSE Q121 showed a third successive quarter of improvement (a reducing decline in organic revenue), with Dentsu Japan down 0.9% on Q120 and Dentsu International 3.5% below Share price graph (¥) prior year. Operating margins were considerably stronger in both segments as the transformation plan has kicked in. Q221 started strongly and we left our FY21 and FY22 revenue and margin estimates unchanged, but if trading continues to improve, there may be scope to move numbers later in the year, subject to the status of the planned Olympics. FY22 should be a stronger year of margin growth as permanent cost reductions contribute. The group recently joined the World Business Council for Sustainable Development.
INDUSTRY OUTLOOK
Dentsu forecasts global ad spend to bounce 5.8% in FY21 but with large variations. Digital Company description marketing and eCommerce spend should increase faster. Other commentators have Dentsu Group is a holding company recently raised estimates. The Japanese ad market still lags the digital transition curve, with with two operational networks: Dentsu Japan Network and Dentsu TV prominent (26.8% share), exceeded by digital (33%). The FY20 postponement of the International. Operating in over 145 Tokyo Olympics contributed to a y-o-y ad spend decline of 16.6% in Japan. Forecast countries, Dentsu Group provides a wide range of client-centric integrated recovery is 5.3% in FY21, in line with global GDP growth and based on the Olympics taking communications, media and digital services. place as scheduled. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (¥m) (¥m) (¥m) (¥) (x) (x) % 1m 3m 12m Actual 8.5 (4.3) 41.1 2019 1047881.0 160279.0 101340.0 271.0 14.3 13.7 Relative* 6.4 (1.3) 14.7 2020 939243.0 90061.0 123470.0 249.0 15.6 18.9 * % Relative to local index Analyst 2021e 954424.0 65966.0 124710.0 269.0 14.4 6.1 Fiona Orford-Williams 2022e 1010255.0 159866.0 149710.0 335.0 11.6 32.1
Sector: Electronics & elec eqpt discoverIE Group (DSCV) Price: 910.0p Market cap: £814m INVESTMENT SUMMARY Market LSE discoverIE’s FY21 results confirmed that measures taken to manage the business through the pandemic minimised the impact on profitability and reduced gearing significantly. The Share price graph (p) company beat our recently upgraded forecasts for FY21, with underlying operating profit and EPS ahead by 3.9% and 6.9% respectively due to higher-than-expected gross margin, and lower-than-expected finance costs and tax. Strong order intake in H221 has returned the business to organic growth and the company continues to make higher-margin acquisitions in the Design & Manufacturing business. We lift our underlying EPS forecast by 5.3% for FY22.
INDUSTRY OUTLOOK
discoverIE Group is a designer, manufacturer and supplier of customised electronics to Company description industry with operations throughout Europe and increasingly outside Europe. The company discoverIE is a leading international is focused on growing the percentage of higher-margin specialist product through organic designer, manufacturer and supplier of customised electronics to industry, growth and acquisition. Its key markets (more than two-thirds of sales) are medical, supplying customer-specific electronic renewables, transportation and industrial connectivity, all of which are good growth markets. products and solutions to original equipment manufacturers.
Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 22.2 34.6 83.5 2020 466.4 50.9 34.6 31.8 28.6 N/A Relative* 22.3 29.9 58.1 2021 454.3 48.4 32.6 27.0 33.7 N/A * % Relative to local index Analyst 2022e 498.0 52.1 35.3 28.6 31.8 N/A Katherine Thompson 2023e 513.0 54.2 37.2 29.7 30.6 N/A
Edison Insight | 24 June 2021 22 Sector: Technology Doctor Care Anywhere Group (DOC) Price: A$0.90 Market cap: A$287m INVESTMENT SUMMARY Market ASX Doctor Care Anywhere's Q121 update showed that it continues to grow robustly in 2021, with revenue and consultations up c 260% y-o-y, ending the period with a solid balance Share price graph (A$) sheet (net cash of £35.1m). Management remains confident of the growth potential for the rest of the year and expects revenue in 2021 to grow by at least 100% above 2020 levels, implying at least £23.2m in group revenue in 2021.
INDUSTRY OUTLOOK
The global telehealth market is forecast to grow at a CAGR of 23.1% from US$5.3bn in 2019 to US$14.9bn by 2024, primarily driven by COVID-19 related changes to consumer habits. The robust growth in demand for telehealth since the start of the pandemic combined with the stellar returns investors earned by investing in Teladoc, the largest Company description telehealth company in the world, led to a raft of telehealth company listings in 2020, raising Doctor Care Anywhere is a an aggregate US$1.88bn in IPO proceeds and have posted a median return of 26.9% since fast-growing telehealth company focused on delivering high-quality care listing, which has meant that investor appetite for IPOs is likely to continue in 2021. to its patients, while reducing the cost of providing healthcare for health insurers and healthcare providers.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 6.5 (14.3) N/A 2019 5.7 (3.8) (4.4) (3.71) N/A N/A Relative* 2.0 (21.3) N/A 2020 11.6 (7.8) (13.5) (7.81) N/A N/A * % Relative to local index Analyst 2021e 23.4 (15.5) (16.3) (5.09) N/A N/A Brendan D’Souza 2022e 37.4 (11.4) (9.0) (2.80) N/A N/A
Sector: Technology Draper Esprit (GROW) Price: 870.0p Market cap: £1331m INVESTMENT SUMMARY Market AIM Draper Esprit reported a very strong FY21, with a 51% increase in GPV to £984m and a 57% rise in NAV to £1.03bn, together with realisations and exits at a record £206m. As at Share price graph (p) 31 March 2021, plc cash stood at £160.7m. Immediately following the results, management announced a placing and retail offer raising £111m at 800p per share, an 8% premium to the latest NAV of 743p per share, as at 31 March 2021. The cash raised will be used to increase Draper Esprit’s rate of investment to £150m pa. Following the raise, net of £48m of post year-end investment, we estimate that Draper Esprit has net cash of over £215m.
INDUSTRY OUTLOOK
Technology valuations have had a very strong run as COVID-19 fears have abated, with sustained valuations amidst a robust funding environment. Investors have preferred stocks Company description with embedded value that offer the potential for meaningful exits in a realistic timeframe. Draper Esprit is a London-based Consistency of NAV performance, realisations and cash exits are the key metrics by which venture capital (VC) firm that invests in the European technology sector. to judge success. Draper Esprit has a portfolio of c 70 investee companies and includes a range of funds (seed, EIS and VCT) within the group, as well as its flagship balance sheet VC fund. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 16.9 (1.4) 91.2 2020 52.0 N/A 41.4 33.7 25.8 24.5 Relative* 17.1 (4.8) 64.8 2021 288.8 N/A 268.9 207.3 4.2 4.1 * % Relative to local index Analyst 2022e N/A N/A N/A N/A N/A N/A Richard Williamson 2023e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 23 Sector: Media Ebiquity (EBQ) Price: 52.0p Market cap: £41m INVESTMENT SUMMARY Market AIM Trading conditions eased for Ebiquity in H220 as advertisers ventured back into the market after a COVID-19 affected first half. The group also gained new business, some following Share price graph (p) the withdrawal of Accenture from the media assurance market, with momentum continuing into Q121. Demand for Ebiquity’s services should be amplified by the complexity of the market and advertisers’ need to optimise the return on their spend, further boosted by new solutions to address responsible media investment. We expect the increased emphasis on digital capabilities, encapsulated in new KPIs, should help revenues – and profits – recover, which in turn will likely lead to an improved rating.
INDUSTRY OUTLOOK
Ebiquity has launched its Digital Innovation Centre, based around Digital Decisions. This Company description offering is designed to address the depletion prevalent in digital marketing, which remains Ebiquity is a leading, tech-enabled, beset by issues of transparency, fraud and wastage, with up to 30% of digital ad spend independent marketing and media consultancy. It helps the world's wasted. Total global digital ad spend is set to have exceeded a 50% share of total ad spend biggest brands leverage data and in 2020, so this opportunity is clearly substantial, with no major incumbents providing this analytics to drive greater transparency in the marketing ecosystem, to create service. more impactful customer experiences and to deliver greater returns on marketing investment. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (8.0) 91.2 76.3 2019 68.1 8.6 4.7 2.9 17.9 11.5 Relative* (7.8) 84.5 51.9 2020 55.9 1.8 (1.3) (1.9) N/A 118.5 * % Relative to local index Analyst 2021e 61.0 5.0 2.6 2.5 20.8 12.1 Fiona Orford-Williams 2022e 68.3 7.4 5.0 4.7 11.1 10.6
Sector: Technology EMIS Group (EMIS) Price: 1128.0p Market cap: £714m INVESTMENT SUMMARY Market AIM Throughout FY20, EMIS focused on helping its customer base in the fight against COVID-19, adapting its solutions to support testing and treatment of the disease and the Share price graph (p) vaccine roll-out programme. EMIS reported flat revenue and adjusted operating profit for the year and has indicated that it expects growth to resume in FY21. Development of the EMIS-X platform, started in 2018, positions the company well to meet the evolving needs of the healthcare sector, opening up opportunities in health data analytics and collaboration between the health and life sciences sectors. At its AGM on 6 May, the company confirmed trading so far this year has been in line with expectations.
INDUSTRY OUTLOOK
EMIS is the leading software supplier to the UK GP market, with a greater than 50% market Company description share. It has a strong position in community pharmacies, community health, A&E and EMIS is a software supplier with two hospital pharmacies. The EMIS-X platform is being developed to promote greater divisions. EMIS Health supplies integrated care technology to the NHS, interoperability between NHS departments, in line with the NHS Long Term Strategy. including primary, community, acute and social care. EMIS Enterprise is a B2B software provider to the UK healthcare market, including medicines management, partner businesses, patient-facing services and analytics. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (5.7) 1.6 7.6 2019 159.5 55.6 41.0 53.5 21.1 14.2 Relative* (5.6) (1.9) (7.2) 2020 159.5 53.5 43.4 56.4 20.0 11.1 * % Relative to local index Analyst 2021e 164.1 55.7 43.8 56.2 20.1 15.4 Katherine Thompson 2022e 172.7 59.1 46.5 59.7 18.9 11.8
Edison Insight | 24 June 2021 24 Sector: Technology EML Payments (EML) Price: A$3.77 Market cap: A$1364m INVESTMENT SUMMARY Market ASX EML Payments’ Q321 trading update confirmed that revenue for the first nine months of 2021 was 65% higher y-o-y and EBITDA was 62% higher (margin 30.5%). The company Share price graph (A$) also gave an update on the regulatory issue in Ireland, confirming ongoing dialogue with the regulator. We have updated our forecasts to reflect one-off costs relating to this issue and revised the mix of revenue for FY21 based on Q321 performance. This results in lower GDV and revenue forecasts for the General Purpose Reloadable (GPR) and Virtual Account Numbers (VANs) divisions in FY22/23 and reduces our NPATA forecasts for both years.
INDUSTRY OUTLOOK
In terms of market size, US$1,848bn was loaded onto prepaid cards in 2019 and this is forecast to grow to US$5,511bn by 2027, a CAGR of 14.6% (source: Applied Market Company description Research). EML is keen to gain share of this fast growing market, and as part of its Project EML Payments is a payment solutions Accelerator strategy to position the company at the forefront of payment-related technology, company specialising in the prepaid stored value market, with mobile, has made its first two investments via its FinLabs incubator. physical and virtual card offerings. It manages thousands of programmes across 28 countries in Europe, North America and Australia.
Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual (26.8) (28.7) (0.3) 2019 97.2 29.7 25.6 7.8 48.3 N/A Relative* (29.9) (34.5) (20.8) 2020 121.0 32.5 21.6 5.5 68.5 N/A * % Relative to local index Analyst 2021e 182.7 50.1 34.7 7.5 50.3 N/A Katherine Thompson 2022e 243.2 67.8 47.2 9.9 38.1 N/A
Sector: Mining Endeavour Mining (EDV) Price: C$29.50 Market cap: C$7440m INVESTMENT SUMMARY Market Toronto Endeavour's (EDV's) acquisitions of SEMAFO and Teranga have projected it into the top 10 gold producing companies globally with output of c 1.5Moz pa and a targeted AISC of Share price graph (C$) US$900/oz with c US$100m in annual synergies. It is now on the cusp of being net debt free, has listed in London and is now therefore also eligible for inclusion in the various FTSE indices. Production and adjusted EPS in Q121 were materially higher (and AISC lower) than our prior forecasts.
INDUSTRY OUTLOOK
Exploration has yielded 84% of a five-year target of 10–15Moz Au after four years, which has already increased medium-term production levels at Ity and Hounde to 0.5Moz pa (combined) until 2028. It has been hedge-free since end-Q220, announced a progressive Company description minimum dividend policy, added US$342m in value to Fekekro and Kalana (100% basis) via Following its acquisitions of SEMAFO updated PFSs and also announced a share buyback programme. In the aftermath of the and Teranga, Endeavour has become one of the top 10 major gold producers Teranga acquisition, we value EDV at US$35.88 (£25.42) per share and potentially as high globally, with seven mines in Côte as US$56.96/share. d’Ivoire, Burkina Faso and Senegal plus a portfolio of development projects, all in the West African Birimian greenstone belt. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 2.6 15.0 (0.2) 2019 1362.1 618.4 220.4 56.95 42.6 6.1 Relative* 0.0 8.3 (22.7) 2020 1847.9 910.3 501.2 181.51 13.4 3.7 * % Relative to local index Analyst 2021e 2758.1 1386.6 788.1 184.54 13.1 5.3 Charles Gibson 2022e 2495.1 1417.3 930.2 252.85 9.6 4.4
Edison Insight | 24 June 2021 25 Sector: Technology Ensurge Micropower (ENSU) Price: NOK0.73 Market cap: NOK917m INVESTMENT SUMMARY Market Oslo Ensurge formally completed its first product design in January and has manufactured its first prototype cells. It is continuing its programme to transfer process technology from a Share price graph (NOK) sheet-based production line to the much higher-volume roll-to-roll line ahead of volume ramp-up by end FY21. Regarding the commercial agreement discussions with five OEMs in the hearables and wearable electronics markets referred to in April, one (a Fortune Global 500 company active in the wearables market) has moved to a commercial agreement under which Ensurge will supply microbatteries for evaluation in H221; discussions with the others are ongoing. The company looks on track to deliver initial product revenues in late 2021.
INDUSTRY OUTLOOK
EBITDA losses, excluding share-based payments, widened by $1.2m y-o-y during Q121 to Company description $3.2m. Following a fund-raising programme generating $8.2m (net), cash at end Q121 Ensurge Micropower's (previously Thin totalled $7.6m. Management estimates that this cash, together with that generated from Film Electronics') solid-state lithium battery technology combines advanced warrants that holders have already asked to exercise, is sufficient to fund the company well energy cell design with proprietary into Q321. Additional financing from warrants yet to be exercised potentially extends the materials and manufacturing innovation to produce thin, flexible cash runway into Q122. Management has stated that it intends to seek additional financing batteries that can power safer and more capable hearables and wearable to fund activities further into 2022. devices. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 3.7 (8.5) 49.0 2019 1.2 (30.6) (35.9) (61.23) N/A N/A Relative* 1.4 (11.2) 15.1 2020 0.5 (11.4) (15.3) (3.90) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Sector: Construction & blding mat Epwin Group (EPWN) Price: 108.2p Market cap: £157m INVESTMENT SUMMARY Market AIM Epwin FY20 results came in c £0.9m ahead of our expected £4.1m PBT (and c £0.6m better on a company defined basis, which excludes share-based payments) with EBIT and net Share price graph (p) interest both slightly better than anticipated. Overall group revenue and EBIT were down y-o-y by c 15% and c 56% respectively, with a group EBIT margin for the year of 3.9% (down 360bp). Almost all of the year-on-year dent occurred in H1 trading which was most directly affected by initial lockdown conditions. The second half performance was more comparable to H219 (slightly higher in revenue terms, slightly lower at the EBIT level). Good market momentum appears to have continued into the early months of 2021, with revenue in both divisions ahead of Q1 levels seen in both FY19 and FY20.
INDUSTRY OUTLOOK
Company description Epwin is exposed to both RMI (c 70% revenue) and newbuild (c 30%) in the UK housing Epwin supplies functional market. RMI activity is currently stronger that other sectors which are also recovering low-maintenance exterior building products (including windows, doors, gradually. There is some caution associated with potential impacts of rising unemployment roofline and rainwater goods) into a on consumer confidence. number of UK market segments and is a modest exporter.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.9 14.0 56.0 2019 282.1 38.2 15.0 8.5 12.7 4.4 Relative* 3.0 10.0 34.4 2020 241.0 28.6 5.0 4.0 27.1 6.5 * % Relative to local index Analyst 2021e 301.7 35.7 10.0 5.6 19.3 4.7 Toby Thorrington 2022e 306.8 39.1 13.3 7.5 14.4 4.1
Edison Insight | 24 June 2021 26 Sector: Technology EQS Group (EQS) Price: €37.40 Market cap: €295m INVESTMENT SUMMARY Market Scale The intended acquisition of Business Keeper consolidates EQS’s position as market leader in whistleblowing provision in Europe ahead of the full implementation of the regulation. It Share price graph (€) brings with it c 300 customers, extending the pipeline of warm leads for other group services, as well as additional trained and operational sales resource for the short-term push. The €97m purchase price is being met from a mix of cash, debt and equity (0.59m new shares have been placed at €38), limiting dilution. The FY25 revenue target rises from €100m to €130m, with an (unchanged) EBITDA margin aspiration of 30%. We will update our forecasts on completion, likely to be in August.
INDUSTRY OUTLOOK
While this EU whistleblowing regulation is now active, the deadline for implementation in Company description national laws is two years (December 2021). We would therefore expect the benefit to be EQS is a leading international provider heavily skewed to H221 and into H122, amplified further by the Business Keeper of regulatory technology in the fields of corporate compliance and investor acquisition, while the additional sales cost will be in place for most of H121. The pandemic relations. Its products enable corporate has provided fertile territory for selling online communications solutions, and we would clients to fulfil complex national and international disclosure obligations, expect a proportion off this to be retained once physical meetings resume in greater minimise risks and communicate transparently with stakeholders. numbers. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 21.4 10.0 117.4 2019 35.4 2.6 (0.3) (7.41) N/A N/A Relative* 20.9 5.2 72.9 2020 37.6 4.8 0.4 4.12 907.8 N/A * % Relative to local index Analyst 2021e 45.5 1.1 (3.2) (28.56) N/A N/A Fiona Orford-Williams 2022e 53.2 4.3 (0.1) (2.12) N/A N/A
Sector: Technology Esker (ALESK) Price: €237.00 Market cap: €1374m INVESTMENT SUMMARY Market Euronext Growth In Q121 Esker reported record revenue of €31m (+10% y-o-y, +14% constant currency) and 45% growth in bookings on an annual recurring revenue basis. Management has slightly Share price graph (€) increased its outlook for revenue growth in FY21 (from 15% to 16%) and more explicitly guided on profitability (operating margin of 12–15%). We maintain our conservative forecasts, which are at the lower end of guidance. Esker recently announced a partnership with KPMG France to supply its e-invoicing technology, building on Esker's alliance with KPMG Netherlands.
INDUSTRY OUTLOOK
Esker's DPA software operates across five areas: document delivery, accounts payable, accounts receivable, procurement and sales order processing. Competitors are different for Company description each business process and consist of business process outsourcers and specialist DPA Esker provides end-to-end software companies. Customers move to using DPA software to reduce paper-related costs SaaS-based document automation solutions supporting order-to-cash and and errors in processing, to speed up the cash conversion cycle, to improve process procure-to-pay processes. In FY20, the visibility within the enterprise and to improve customer service. business generated 56% of revenues from Europe, 38% from the US and the remainder from Asia and Australia.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 10.7 28.7 104.3 2019 104.2 20.1 13.6 179.0 132.4 63.1 Relative* 7.4 19.5 55.4 2020 112.3 21.9 14.5 195.0 121.5 55.4 * % Relative to local index Analyst 2021e 128.6 25.8 17.7 232.0 102.2 55.9 Katherine Thompson 2022e 151.8 34.2 25.5 329.0 72.0 43.4
Edison Insight | 24 June 2021 27 Sector: Food & drink Evolva (EVE) Price: CHF0.18 Market cap: CHF167m INVESTMENT SUMMARY Market Swiss Stock Exchange Evolva's overall geographical and product footprint continues to expand and the pipeline remains robust. The company's aim remains to reach cash break-even by FY23. Due to Share price graph (CHF) COVID-19, Evolva has witnessed a softening in demand for some of its flavour and fragrance products, but recent results demonstrate Evolva's progress in transforming itself from an R&D-driven enterprise towards a commercial company with a product-based revenue model. The Q1 trading update confirmed the company is on track, and it subsequently announced it has secured up to CHF20m of funding via convertible notes from investment firm Nice & Green.
INDUSTRY OUTLOOK
Food and health ingredients continue to be in the sweet spot as consumers demand Company description healthier products with cleaner labels without compromising on taste or convenience. Evolva is a Swiss biotech company Evolva's fermentation platform aims to deliver these benefits while reducing production focused on the research, development and commercialisation of products costs. based on nature. The company has leading businesses in Flavours and Fragrances, Health Ingredients and Health Protection.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (CHFm) (CHFm) (CHFm) (CHFc) (x) (x) % 1m 3m 12m Actual (3.8) (15.0) (29.3) 2019 11.6 (12.3) (15.6) (2.0) N/A N/A Relative* (10.3) (21.9) (39.7) 2020 7.5 (16.7) (23.4) (2.9) N/A N/A * % Relative to local index Analyst 2021e 14.3 (15.1) (17.0) (2.1) N/A N/A Sara Welford 2022e 27.4 (2.5) (4.5) (0.5) N/A N/A
Sector: Technology Expert.ai (EXSY) Price: €2.82 Market cap: €143m INVESTMENT SUMMARY Market Borsa Italiana The first year of Expert.ai's five-year plan ‘Path to Lead’ was essentially a year of investment, and despite the disruption caused by the pandemic, the company made good Share price graph (€) progress meeting key funding, product, marketing and hiring milestones. Management is maintaining its financial projections for the plan for FY21–24, which calls for modest growth this year, followed by accelerating growth in FY22–24, and positive EBITDA from FY23. We have made small changes to our forecasts for FY21 and FY22 and introduced forecasts for FY23.
INDUSTRY OUTLOOK
Ever-increasing amounts of data are being produced, 80% of which are estimated to be unstructured. The need to derive useful insights from this growing body of data is driving the Company description demand for cognitive computing and smarter artificial intelligence solutions, such as those Expert.ai has developed and patented offered by Expert.ai. ResearchAndMarkets estimates that the global text analytics market an AI-based technology platform that extracts useful information from was worth $4bn in 2018 and is forecast to grow at a CAGR of 17.3% to 2023. unstructured text using a unique mix of natural language understanding and machine learning algorithms and applies it to verticals such as enterprise search, customer experience management and big data Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF analytics. Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 2.2 (6.8) (7.3) 2019 33.7 5.5 (0.5) (1.6) N/A 43.9 Relative* 0.5 (10.9) (28.9) 2020 30.6 (1.9) (10.6) (20.2) N/A N/A * % Relative to local index Analyst 2021e 32.2 (7.2) (15.0) (26.6) N/A N/A Katherine Thompson 2022e 45.5 (1.3) (10.0) (17.8) N/A N/A
Edison Insight | 24 June 2021 28 Sector: Technology Filtronic (FTC) Price: 11.1p Market cap: £24m INVESTMENT SUMMARY Market LSE In early 2020 Filtronic’s management refocused the business on market niches where the company’s expertise in designing and manufacturing high performance radio-frequency Share price graph (p) (RF) components and sub-systems operating at frequencies up to 180GHz can command a premium. Having doubled the RF manufacturing capacity in FY20, management’s strategy, led by new CEO Richard Gibbs, is to broaden the customer base and product range. Generating higher revenues from the same cost base should deliver improved EBITDA margin.
INDUSTRY OUTLOOK
Filtronic remained fully operational throughout the coronavirus lockdowns and its end-markets remained reasonably robust. Importantly, demand for critical communications Company description products to the public safety market in the US recovered during Q421 as COVID-19-related Filtronic is a designer and delays to new installations and system upgrades started to ease. Management expects the manufacturer of advanced RF communications products supplying a resultant improvement in trading during H2 after a softer H1 to deliver FY21 revenues of c number of market sectors including £15.6m (FY20: £17.2m). Moreover, management expects that a favourable sales mix at mobile telecommunications infrastructure, public safety, defence higher margins will deliver EBITDA of £1.8m (FY20: £1.2m). and aerospace.
Y/E May Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 27.1 27.1 27.1 2019 15.9 0.7 0.1 0.05 222.0 N/A Relative* 27.3 22.7 9.6 2020 17.2 1.2 0.1 0.05 222.0 N/A * % Relative to local index Analyst 2021e 15.6 1.8 0.2 0.07 158.6 N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Sector: Industrial support services Forward Industries (FORD) Price: US$3.00 Market cap: US$30m INVESTMENT SUMMARY Market NASDAQ Revenues grew by $1.8m year-on-year during H121 to $18.1m. The increase was primarily attributable to Kablooe Design, acquired in August 2020, and to a lesser extent to sales of Share price graph (US$) smart furniture to big-box retail stores, though growth here was slower than management had planned because of the pandemic. Excluding a goodwill impairment in H120, losses from operations widened by $0.3m to $1.0m, reflecting additional costs associated with developing smart furniture sales channels and the Kablooe acquisition, and a rise in bad debt expenses.
INDUSTRY OUTLOOK
The group's two product design activities, Intelligent Product Solutions and the more recent acquisition Kablooe Design, have launched a complete medical device design and Company description engineering service, integrating the expertise of both firms. The combined services offer Forward Industries provides includes human factors engineering, verification and regulatory support along with upfront outsourced design, manufacturing, sourcing and distribution services. It research and testing. creates innovative products based on IoT and wearable technology for a wide range of global partners. It also sources carry cases for some of the world’s leading healthcare companies. Y/E Sep Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 23.0 (1.6) 125.6 2019 37.4 (0.2) (0.7) (7.06) N/A N/A Relative* 21.8 (7.6) 68.7 2020 34.5 0.0 (0.4) (4.16) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 29 Sector: Consumer support services Games Workshop Group (GAW) Price: 11200.0p Market cap: £3671m INVESTMENT SUMMARY Market LSE The year-end trading update highlighted higher revenue and a more significant increase in operating profit and licensing income, versus our expectations. FY21 has been very strong Share price graph (p) despite COVID-19 restrictions on Retail, likely incremental costs due to Brexit, and recent currency headwinds. Management’s new estimates for FY21 of sales not less than £350m and PBT not less than £150m, imply y-o-y growth for revenue and PBT of at least c 30% and c 68% respectively and limited underlying cost growth of c 4%. The strong performance has led to higher year-on-year rewards for staff (profit-related pay increased fivefold) and shareholders (total dividend of 235p vs 145p).
INDUSTRY OUTLOOK
Games Workshop is the global leader for tabletop miniature gaming, a market it created. Company description Tabletop miniature gaming is the fastest-growing segment of the global non-digital games Games Workshop is a leading market, which is expected to grow at a CAGR of 9% between 2017 and 2023 and reach a international specialist designer, manufacturer and multi-channel value exceeding $12bn. retailer of miniatures, scenery, artwork and fiction for tabletop miniature games set in its fantasy Warhammer worlds.
Y/E May Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.9 17.1 40.5 2019 256.6 97.1 81.3 200.8 55.8 50.5 Relative* 1.0 13.0 21.1 2020 269.7 115.6 89.4 217.8 51.4 35.2 * % Relative to local index Analyst 2021e 350.5 179.9 152.1 367.6 30.5 27.7 Russell Pointon 2022e 375.5 187.1 158.1 380.9 29.4 24.3
Sector: Travel & leisure Gamesys Group (GYS) Price: 1851.0p Market cap: £2031m INVESTMENT SUMMARY Market LSE On 24 March 2021, Gamesys Group and Bally’s Corporation announced that they have reached an agreement in principle on the key terms of a possible combination, in which Share price graph (p) Bally’s would acquire the entire share capital of Gamesys.
INDUSTRY OUTLOOK
For the purposes of the Takeover Code, Edison is deemed to be connected with Gamesys Group as a provider of paid-for research. Under Rule 20.1 Edison must not include any profit forecast, quantified financial benefits statement, asset valuation or estimate of other figures key to the offer, except to the extent that such forecasts, statements, valuations or estimates have been published prior to the offer period (as defined in the Takeover Code) by an offeror or the offeree company (as appropriate) in accordance with the requirements Company description of the Code. Consequently we have removed our estimates until the offer period ends. Gamesys is a leading international online gaming operator. The group was formed after JPJ Group acquired Gamesys for £490m in September 2019.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.1) 14.5 119.1 2019 565.3 158.9 119.5 100.4 18.4 25.8 Relative* (1.0) 10.5 88.8 2020 727.7 206.2 163.1 142.4 13.0 8.9 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Russell Pointon 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 30 Sector: Technology GB Group (GBG) Price: 839.5p Market cap: £1649m INVESTMENT SUMMARY Market AIM GB Group (GBG) reported FY21 results substantially in line with our recently upgraded forecasts. In a difficult year, GBG managed to grow revenue by 9% (12% on an organic Share price graph (p) basis) and EPS by 21% while repaying all debt. The company announced a final dividend of 3.4p, taking the full year dividend to 6.4p. Management has returned to a growth footing, investing in product development and sales capacity while continuing to seek acquisitions that could expand product or market coverage. We have upgraded our normalised diluted EPS forecasts by 3.1% for FY22 and 2.0% for FY23 and introduce a forecast for EPS growth of 9.3% in FY24.
INDUSTRY OUTLOOK
Globalisation and the growth in internet trading have also resulted in the need for higher Company description compliance standards in light of the rising scope and financial impact of cybercrime. This, in GB Group specialises in identity data turn, is driving the demand for more complex and comprehensive solutions for the intelligence. Its products/services enable customers to understand and verification of personal data. verify clients and employees in fraud, risk management, compliance and customer on-boarding services. With headquarters in the UK, it operates across 16 countries. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (4.2) 1.9 22.7 2020 199.1 51.7 45.7 17.9 46.9 N/A Relative* (4.1) (1.7) 5.8 2021 217.7 61.4 56.7 21.7 38.7 N/A * % Relative to local index Analyst 2022e 209.6 50.8 46.5 17.7 47.4 N/A Katherine Thompson 2023e 233.0 56.6 52.1 19.6 42.8 N/A
Sector: Mining Gemfields Group (GML) Price: ZAR1.65 Market cap: ZAR1928m INVESTMENT SUMMARY Market JSE On 19 April Gemfields announced exceptional results from five emerald mini-auctions held between 15 March and 17 April which generated US$31.4m, the highest Kagem auction Share price graph (ZAR) revenue since March 2016. The average price of US$115.59/ct is well above that received previously, in part due to the mix of stones offered. Combining this auction result with the October/November mini-auctions (where prices were lower as some of the higher quality goods were not offered) gives an average price of US$93.21/ct – still an all time high. 36 of 37 lots offered were sold (99% of carats offered) and 59 companies submitted bids.
INDUSTRY OUTLOOK
Gemfields' online mini-auction process (as customers cannot travel internationally to auctions as usual, stones were shown in Tel Aviv, Dubai and Jaipur followed by an online Company description auction) has been a resounding success. The very strong auction results announced on 19 Gemfields is a world-leading supplier April add to the US$58.9m generated from the ruby mini-auctions announced 8 April. Not of responsibly sourced coloured gemstones. It owns 75% of Montepuez only does the US$90.3m in 2021 auction revenues to date help shore up Gemfields’ Ruby Mining in Mozambique, 75% of balance sheet while mining operations ramp back up, the success of the auctions is a clear the Kagem emerald mine in Zambia, the Fabergé jewellery business and an indication of the strength of market demand for the company’s high quality emerald and investment in Sedibelo Platinum. ruby production. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 3.1 5.1 0.0 2019 216.2 80.9 55.9 1.3 9.2 4.1 Relative* 5.7 6.9 (17.8) 2020 34.6 (30.0) (84.7) (6.1) N/A N/A * % Relative to local index Analyst 2021e 190.1 33.1 1.2 (1.5) N/A 3.7 Alison Turner 2022e 240.3 80.8 52.2 1.5 8.0 2.4
Edison Insight | 24 June 2021 31 Sector: General industrials Genuit Group (GEN) Price: 607.0p Market cap: £1503m INVESTMENT SUMMARY Market LSE Good trading momentum seen at the end of FY20 has continued into Genuit’s new financial year and, compared to pre-pandemic FY19, like-for-like revenues (for the first four months Share price graph (p) to end April) were ahead by 13.5%. Headline revenues (+31.7%) have been further boosted by acquisitions made earlier in the year – with both divisions benefitting - and the largest of which (Adey) is performing ahead of expectations. Challenges in the polymer input market have been effectively managed to date with no business disruption. While flagging some market uncertainties for H2, management retains its expectation of strong progress for the year.
INDUSTRY OUTLOOK
The Construction Products Association estimates that sector activity contracted by c 14% Company description overall in 2020 and expects this to be followed by a similar percentage rise in output in Genuit is a leading supplier of largely 2021, followed by almost 5% in 2022. plastic building products and systems. Operations in the UK (c 90% of revenue) address a broad range of sectors including residential, commercial and civil building demand and a number of subsectors within them. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 6.3 10.4 36.4 2019 447.6 99.1 70.8 29.2 20.8 13.5 Relative* 6.5 6.5 17.6 2020 398.6 63.4 35.7 13.3 45.6 21.5 * % Relative to local index Analyst 2021e 534.6 113.0 81.0 26.9 22.6 14.8 Toby Thorrington 2022e 568.7 120.1 87.8 29.1 20.9 12.8
Sector: Food & drink Greggs (GRG) Price: 2528.0p Market cap: £2568m INVESTMENT SUMMARY Market LSE Greggs’ trading update indicated a strong rebound in trading since the re-opening of non-essential retail in April 2021, with positive like-for-like (LFL) sales growth versus FY19, Share price graph (p) earlier than we had expected. This is significant as it has been achieved despite not operating at full potential (ie reduced SKUs, shorter opening hours and other social distancing measures) and competition has been more limited, though both will normalise in coming months. With strong cost controls, including temporary benefits, the board believes that FY21 profits could be around 2019 levels in the absence of further restrictions. We upgraded our FY21 PBT forecasts by 64%, due to a less pessimistic LFL sales assumption.
INDUSTRY OUTLOOK
Greggs enjoys an expanding market. The Project Café2017UK report (Allegra World Coffee Company description portal) valued the UK coffee shop market in 2016 at £8.9bn, +12% y-o-y, with branded With 2,101 shops, and eight outlets accounting for £3.7bn. Allegra estimates it could reach £16bn by 2025. The manufacturing and distribution centres, Greggs is the leading UK squeezed consumer is a potential concern, although Greggs is well placed for the value ‘food-on-the-go’ retailer. It uses vertical switch after widespread refurbishments and extended customer options as it moves to integration to offer differentiated products at competitive prices. widen its market.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.8 20.8 43.6 2019 1167.9 231.9 114.2 89.7 28.2 10.4 Relative* 2.9 16.6 23.7 2020 811.3 115.4 (12.9) (12.1) N/A 41.4 * % Relative to local index Analyst 2021e 1166.0 227.4 106.5 85.2 29.7 9.1 Russell Pointon 2022e 1266.7 241.8 119.2 97.8 25.8 10.2
Edison Insight | 24 June 2021 32 Sector: Oil & gas Hellenic Petroleum (ELPE) Price: €6.35 Market cap: €1941m INVESTMENT SUMMARY Market Athens Stock Exchange Hellenic has introduced an aggressive capital investment plan (€3.5–4bn by 2030) to upgrade its core refining business through energy-efficiency projects, transitioning to Share price graph (€) cleaner fuels and adopting blue/green hydrogen technologies. It also plans to boost its renewable energy sources aiming for 600MW by 2025 and 2GW by 2030, committing half of the proposed spend to clean energy. These investments should support the planned 50% reduction in Hellenic’s carbon footprint by 2030. While Q121 results were negatively affected by lower domestic oil demand amid the COVID-19 pandemic-driven lockdown, we expect Hellenic will benefit from an increase in demand for transport fuels as the restrictions are gradually lifted in Q221 and with Greece opening for tourists in May. Our valuation stands at €6.91/share.
INDUSTRY OUTLOOK Company description Hellenic Petroleum (ELPE) operates European refining will likely face continued challenges in the coming years as demand falls three refineries in Greece with a total capacity of 344kbod. It has sizeable and refinery systems elsewhere (Asia/US) hold structural advantages. To offset this, marketing (domestic and international) changing regulations should put complex, middle distillate-orientated refineries such as and petrochemicals divisions. ELPE's in a strong position.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 0.6 14.2 5.0 2019 8857.0 570.0 205.0 60.6 10.5 4.0 Relative* 0.1 6.5 (23.2) 2020 5782.0 333.0 5.0 1.8 352.8 4.3 * % Relative to local index Analyst 2021e 7087.0 487.0 167.0 42.6 14.9 4.6 Marta Szudzichowska 2022e 7261.0 626.0 304.0 74.5 8.5 3.5
Sector: Property Impact Healthcare REIT (IHR) Price: 110.6p Market cap: £388m INVESTMENT SUMMARY Market LSE With the portfolio continuing to perform as expected, unaudited Q121 NAV per share increased to 110.48p (end-FY20: 109.58p) and including DPS paid the quarterly NAV total Share price graph (p) return was 2.3%. A Q121 DPS of 1.6025p was declared, in line with the FY21 target of 6.41p (+1.9%). Rents and capital values continue to benefit from RPI-linked rent reviews and rents continue to be received in full as they fall due. Rent cover for the tenant operators remains stable at just under 1.8x. Acquisitions continued in the quarter with the group committing to two properties, a high-quality operational home and a forward funding arrangement, both let/pre-let to a new (13th) tenant. With a low LTV of c 14% including the £35m proceeds of the April equity issue, and a strong and growing pipeline of acquisition opportunities, we expect further accretive growth.
INDUSTRY OUTLOOK Company description Impact Healthcare REIT invests in a Care home demand is driven by demographics and care needs with a shortage of quality diversified portfolio of UK healthcare assets, particularly residential and care homes suggesting strong investment demand in years to come. The pandemic nursing care homes, let on long leases presents a significant near-term challenge to the sector but does not change the underlying to high-quality operators. It aims to provide shareholders with attractive demographic-driven fundamentals while highlighting its critical role in supporting the NHS and sustainable returns, primarily in the form of dividends, underpinned by and the importance of long-term investment. structural growth in demand for care. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.1) (2.6) 11.9 2019 24.0 19.4 17.6 6.9 16.0 18.9 Relative* (0.9) (6.0) (3.5) 2020 30.8 25.6 23.1 7.3 15.2 16.8 * % Relative to local index Analyst 2021e 36.0 30.5 27.0 8.5 13.0 13.7 Martyn King 2022e 37.7 32.1 28.4 8.9 12.4 13.0
Edison Insight | 24 June 2021 33 Sector: Technology IQE (IQE) Price: 47.6p Market cap: £382m INVESTMENT SUMMARY Market AIM As flagged in IQE’s January trading update, group revenues grew by 27% year-on-year during FY20 to a record £178.0m. Wireless revenues jumped by 38% to £94.2m, benefiting Share price graph (p) from 5G infrastructure deployments in Asia and 5G handset adoption. Photonics revenues rose by 17% to £81.6m. Production for IQE’s major VCSEL customer was consistently strong throughout the year. Given the high proportion of fixed costs, the strong year-on-year revenue growth took the group from a £4.7m adjusted operating loss in FY19 to a £5.4m adjusted operating profit.
INDUSTRY OUTLOOK
These favourable trends have continued into FY21. Industry pundits predict a recovery in global handset sales during FY21, which for IQE means that demand for wireless epiwafers Company description for handsets has been strong so far this year, and demand for photonics wafers for 3D IQE is the leading global supplier of sensing applications remains positive. We have left our FY21 estimates broadly unchanged advanced semiconductor wafer products and material solutions to the on a constant currency basis, but have cut our FY21 revenue estimate by £8.3m and PBT semiconductor industry. Applications by £9.5m to reflect the strengthening of sterling against the US dollar. include radio frequency semiconductors, optical network devices, VCSELs and infrared semiconductors. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (2.0) (35.0) (13.5) 2019 140.0 16.2 (7.0) (2.46) N/A 41.9 Relative* (1.8) (37.3) (25.5) 2020 178.0 29.9 3.2 0.29 164.1 10.7 * % Relative to local index Analyst 2021e 175.0 30.3 2.5 0.21 226.7 13.5 Anne Margaret Crow 2022e 185.4 39.0 6.8 0.63 75.6 11.0
Sector: Investment companies John Laing Group (JLG) Price: 399.2p Market cap: £1972m INVESTMENT SUMMARY Market LSE Following JLG’s announcement on 6 May that it was in discussions with KKR, on 19 May it announced a cash offer at 403p per share which has been unanimously recommended by Share price graph (p) the JLG board. The offer price represents a 35% premium to the December 2020 net asset value of 299p (adjusted for the recently paid dividend).
INDUSTRY OUTLOOK
For the purposes of the Takeover Code, Edison is deemed to be connected with John Laing Group as a provider of paid-for research. Under Rule 20.1 Edison must not include any profit forecast, quantified financial benefits statement, asset valuation or estimate of other figures key to the offer, except to the extent that such forecasts, statements, valuations or estimates have been published prior to the offer period (as defined in the Takeover Code) Company description by an offeror or the offeree company (as appropriate) in accordance with the requirements John Laing is an international of the Code. Consequently we have removed our estimates until the offer period ends. originator, active investor and manager of infrastructure projects.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 10.6 29.9 12.5 2019 179.0 111.0 100.0 20.2 19.8 N/A Relative* 10.7 25.3 (3.1) 2020 25.0 (24.0) (65.0) (13.3) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Dan Gardiner 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 34 Sector: Technology Kcell Joint Stock Company (KCEL) Price: US$5.25 Market cap: US$1050m INVESTMENT SUMMARY Market KASE Q1 results published on 30 April saw service revenue growth (ex bulk SMS) of 3.4% y-o-y and handset revenue sales of 50.9%, resulting in total y-o-y growth of 9.9%. EBITDA, Share price graph (US$) excluding non-recurring items, rose by 21.3% to KZT19.4bn and implying a 44.1% margin. The company terminated its GDR programme on 12 June.
INDUSTRY OUTLOOK
Kcell’s prospects have been transformed following KT taking a 75% stake in the business. Consolidation is helping to sustain a recovery in the Kazakhstan mobile market, new management successfully introduced a strategy targeting higher margin segments and Kcell’s major shareholder is now the dominant national telecom player. 2019 saw the company deliver its first growth in service revenues in five years. With little near-term risk of Company description regulatory intervention or a resurgence in aggressive competition, the current market Kcell Joint Stock Company (Kcell) is a structure appears sustainable. mobile operator in Kazakhstan and a listed subsidiary of Kazakhtelecom (KT), a state-owned incumbent with a 70% share of the market.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (KZTbn) (KZTbn) (KZTbn) (KZT) (x) (x) % 1m 3m 12m Actual (5.4) (4.6) (11.0) 2019 156.7 64.4 23.2 50.0 43.8 N/A Relative* N/A N/A N/A 2020 174.7 72.1 31.6 88.0 24.9 N/A * % Relative to local index Analyst 2021e 189.0 78.7 39.4 148.0 14.8 N/A Dan Gardiner 2022e 196.6 81.5 40.5 158.0 13.9 N/A
Sector: Mining KEFI Gold and Copper (KEFI) Price: 1.8p Market cap: £39m INVESTMENT SUMMARY Market LSE KEFI is in the process of finalising the specifics of the remaining funding sources for Tulu Kapi ahead of the project's launch in mid-FY21 and production in mid-FY23. Inter alia, this Share price graph (p) may involve production of 190koz pa (cf 140koz pa currently assumed). In the meantime, the Ethiopian central bank has approved the project's debt financing structure and community resettlement has been authorised.
INDUSTRY OUTLOOK
Prior to November's equity raising (which increased the number of shares by 14.2%), we valued KEFI at 4.05p/share on the basis of its generating c £65m in free cash flow pa. However, this excluded Hawiah (19.3Mt at 1.86% CuE), on which KEFI has completed a recent preliminary economic assessment showing a post-tax NPV(8%) of US$96m Company description (1.37p/share attributable) and on which it has now embarked on a pre-feasibility study. It KEFI Gold and Copper is an also excluded any beneficial interest for KEFI in Tulu Kapi above 45% (potentially 65% exploration and development company focused on gold and copper deposits adding 1.35p/share) and also the value of its other assets (potentially 3.83–8.74p/share). in the highly prospective Arabian-Nubian Shield – principally the Tulu Kapi project in Ethiopia, as well as Hawiah Copper and Gold and Jibal Qutman Gold in Saudi Arabia. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (3.9) (14.5) 96.1 2018 0.0 (4.1) (4.6) (1.0) N/A N/A Relative* (3.8) (17.5) 69.1 2019 0.0 (2.4) (3.5) (0.6) N/A N/A * % Relative to local index Analyst 2020e 0.0 (3.2) (3.4) (0.2) N/A N/A Charles Gibson 2021e 0.0 (1.0) (4.6) (0.1) N/A 98.8
Edison Insight | 24 June 2021 35 Sector: General industrials Kendrion (KENDR) Price: €22.80 Market cap: €340m INVESTMENT SUMMARY Market AMS Kendrion is a global player in high-quality electromagnetic systems that optimise safety, performance and comfort in automotive and industrial applications. The company will benefit Share price graph (€) from long-term disruptive trends such as autonomous driving, electrification, emission reduction and industrial automation. Its valuation shows a discount to peers, which should gradually vanish when company targets are met.
INDUSTRY OUTLOOK
For both Automotive and Industrial a market recovery is expected in 2021–22. In 1Q21, Kendrion reported organic revenue growth of 6% and an increase in EBITDA of 18%. Kendrion's targets for 2025 are an organic revenue growth of at least 5% on average per year and an EBITDA margin of at least 15%. In Automotive, Kendrion focuses on the car of Company description the future (fully electric and autonomous), with existing but particularly with relatively new Kendrion develops, manufactures and products. For Industrial Brakes, Kendrion expects the market to grow >5% per year, with markets high-quality electromagnetic systems for automotive (52% of above-average growth in robotics, wind power and industrial trucks. revenues) and industrial applications (48%). The geographical spread of revenues is Germany 39%, other Europe 30%, the Americas 15% and Asia 16%. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (2.6) 7.0 104.7 2019 412.4 43.8 11.0 93.57 24.4 N/A Relative* (4.5) 1.5 60.0 2020 396.4 44.6 5.7 79.25 28.8 N/A * % Relative to local index Analyst 2021e 438.1 54.1 19.7 109.51 20.8 N/A Johan van den Hooven 2022e 477.5 62.9 29.1 151.89 15.0 N/A
Sector: Technology Keywords Studios (KWS) Price: 2454.0p Market cap: £1851m INVESTMENT SUMMARY Market AIM Having stepped back temporarily for health reasons in Q121, Andrew Day has confirmed he will take early retirement after 12 years as CEO of Keywords. In parallel, Keywords provided Share price graph (p) a trading update, with the group reporting 25% l-f-l revenue growth and overall revenue growth of 36% y-o-y for the first four months of FY21, with ‘good margin delivery’. The comparator period was relatively weak due to the onset of COVID-19, but with good trading momentum and a strong M&A pipeline, the board is confident it can meet FY21 market expectations.
INDUSTRY OUTLOOK
Buoyed by exceptional demand for games during lockdown and boosted by the start of the console transition, the global games industry showed y-o-y growth of 20% in FY20 Company description (Newzoo). There are signs of launch delays in 2021, particularly to larger AAA titles, but as Keywords Studios is the largest and a service provider, this may even benefit Keywords, allowing more time for bug-fixing and most diverse supplier of outsourced services to the games industry. polishing. Newzoo is forecasting 10.5% CAGR 2019–23e as the industry returns to trend Through regular acquisitions, it is growth. building its scale, geographic footprint and delivery capability to become the ‘go to’ supplier across the industry.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (1.4) 4.5 36.1 2019 326.5 57.6 40.9 47.2 60.5 40.4 Relative* (1.2) 0.9 17.3 2020 373.5 74.2 55.0 57.7 49.5 25.0 * % Relative to local index Analyst 2021e 491.5 94.7 72.9 75.3 37.9 24.9 Richard Williamson 2022e 563.9 106.1 83.1 85.4 33.4 21.0
Edison Insight | 24 June 2021 36 Sector: Mining Kopy Goldfields (KOPY) Price: SEK2.06 Market cap: SEK1825m INVESTMENT SUMMARY Market NASDAQ OMX First North Kopy Goldfields has reported its first full year results as a Russian gold producer following the Amur Zoloto reverse acquisition (the comparative 2019 results are for Amur Zoloto Share price graph (SEK) only). The company saw revenue rise 41% to US$98.8m and EBITDA rise 67% to US$45.6m. Having secured a US$42.3m debt facility maturing in September 2023, Kopy is fully funded to support its growth profile and we expect it to end 2021 with net debt of US$61.8m and US$13.7m in cash and undrawn debt facilities.
INDUSTRY OUTLOOK
In our last note on the gold price (The gold rush, published on 11 June 2020), we argued that the sharp increases in the total US monetary base might be expected to support a nominal gold price of US$1,892/oz and potentially as high as US$3,000/oz. While there is a Company description historically strong and statistically significant correlation of 0.909 between the gold price and Following the reverse takeover of Kopy the total US monetary base from 1967 to 2018, there is very little visibility as to how, or to Goldfields by Amur Zoloto in September 2020, the new Kopy boasts what extent, the total US monetary base may be expected to evolve. In the four months to production of >50koz pa of gold from November 2020, the US monetary base was expanding at an average rate of approximately two hard rock mines and a number of smaller placer deposits. Kopy also US$98bn per month, which would equate to an expected increase in the gold price (using retains a 49% interest in the Krasny project and 100% of the Maly Patom the historical correlation) of approximately US$391/oz per year. exploration licences. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (1.7) (11.6) 73.1 2019 70.1 27.3 14.0 1.47 16.8 N/A Relative* (2.9) (16.3) 23.1 2020 98.8 45.6 27.6 2.7 9.1 N/A * % Relative to local index Analyst 2021e 112.3 44.3 30.5 2.7 9.1 N/A Alison Turner 2022e 150.3 72.6 53.4 4.7 5.2 N/A
Sector: Food & drink La Doria (LD) Price: €17.86 Market cap: €554m INVESTMENT SUMMARY Market Borsa Italiana FY20 benefitted significantly from increased at-home consumption caused by the pandemic and we expect volumes to normalise in FY21. That said, we believe there will be a structural Share price graph (€) increase in home consumption once restrictions are lifted, as more flexible working arrangements will continue. The commercial landscape is currently favourable, with high demand levels owing to the pandemic, and low industry stocks. We therefore expect FY21 profitability to remain high, with increased pricing - albeit lower volumes - and a more positive industry backdrop. Q1 results confirmed this and the board maintained its outlook.
INDUSTRY OUTLOOK
La Doria's strategic objectives, published as part of its three-year plan, are broadly unchanged: the priority is to expand the higher margin and less volatile parts of the Company description business to reduce the dependence on the more unpredictable ‘red line’. La Doria is the leading manufacturer of private-label preserved vegetables and fruit for the Italian (17% of revenues) and international (83%) market. It enjoys leading market share positions across its product ranges in the UK, Italy, Germany and Australia.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 4.9 8.2 60.3 2019 717.7 56.0 32.7 64.0 27.9 14.3 Relative* 3.2 3.5 23.0 2020 848.1 83.1 63.3 182.8 9.8 10.1 * % Relative to local index Analyst 2021e 805.7 83.8 61.8 153.5 11.6 8.0 Sara Welford 2022e 813.8 89.5 66.5 164.1 10.9 7.8
Edison Insight | 24 June 2021 37 Sector: Mining Lepidico (LPD) Price: A$0.01 Market cap: A$71m INVESTMENT SUMMARY Market ASX Lepidico's patented technologies produce lithium hydroxide plus a range of by-products from less contested minerals such as lepidolite. Technically, its project has been de-risked Share price graph (A$) by a successful pilot plant campaign and, in May 2020, it announced the results of a definitive feasibility study (DFS) to produce c 4,900t of battery grade lithium hydroxide monohydrate pa (7,800tpa LiOH equivalent) over 14 years.
INDUSTRY OUTLOOK
The DFS calculated a project NPV(8%) of US$221m and a 31% IRR after initial capex of US$139m. Since then, Lepidico has advanced the project to development status by awarding an EPCM contract to Lycopodium, concluding offtake agreements and (effectively) completing the permitting and approvals process. Recently, it has also raised A$12.5m in Company description equity, after which we valued the shares at 4.96c/share plus a potential 0.61–1.53c/share Via its Karibib project in Namibia and for a risk-adjusted 20,000tpa LCE Phase 2 plant. In the meantime, the US DFC is unique IP, Lepidico is a vertically integrated lithium development evaluating the project for potential preferential debt financing. business that has produced both lithium carbonate and lithium hydroxide from non-traditional hard rock lithium-bearing minerals using its registered L-Max and LOH-Max processes. Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual (29.4) (53.8) 50.0 2019 0.0 (4.0) (5.1) 0.0 N/A N/A Relative* (32.4) (57.6) 19.1 2020 0.0 (4.9) (10.8) 0.0 N/A N/A * % Relative to local index Analyst 2021e 4.1 1.1 (0.4) 0.0 N/A 19.0 Charles Gibson 2022e 0.0 (25.6) (26.7) 0.0 N/A N/A
Sector: Financials London Stock Exchange Group (LSEG) Price: 7966.0p Market cap: £40313m INVESTMENT SUMMARY Market LSE LSEG's transformational acquisition of Refinitiv completed on 29 January, substantially strengthening its proposition in data and analytics and adding high-growth execution Share price graph (p) platforms in FX and fixed income. The combined business, with pro forma FY20 revenue of c £6.8bn, has three core business areas: Data & Analytics including real-time data, fundamental data and indices which together account for c 69% of revenue; Capital Markets (LSE markets plus FXall and Tradeweb), 17% of revenue; and Post Trade (OTC and non OTC clearing and collateral cash management), 14% of revenue. In its Q121 update LSEG reported total income up 3.9% (constant currency, ex-recoveries). The Refinitiv integration programme is well underway while the €4.4bn Borsa Italiana divestment was completed in April.
INDUSTRY OUTLOOK Company description London Stock Exchange Group Post-Refinitiv transaction financial targets include: year-five revenue and cost synergies of (LSEG) is a diversified global financial markets infrastructure and data >£225m (3.4%) and >£350m (7.1%), respectively, a three-year post deal revenue CAGR of business. Its core areas of activity are: 5–7% and a medium-term EBITDA margin of 50%. The group has signalled increased data and analytics (including indices), capital markets and post trade. investment in capex and operating expenses to provide for growth and separation of Borsa Italiana but still looks for >30% EPS accretion in the the first year post completion. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 9.9 8.3 (1.2) 2019 2314.0 1265.0 994.0 200.3 39.8 N/A Relative* 10.0 4.5 (14.8) 2020 2444.0 1329.0 1061.0 209.7 38.0 N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Andrew Mitchell 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 38 Sector: General retailers Lookers (LOOK) Price: 65.5p Market cap: £256m INVESTMENT SUMMARY Market LSE Lookers is the second largest UK new car retailer. In COVID-affected FY20, a £36.1m H120 underlying PBT loss has been followed by strong H220 trading with the 18 March trading Share price graph (p) update statement indicating a c £10m profit for FY20 compared to analyst consensus for a small loss. FY20 results are to be released on 29 June. At 30 April 2021 net debt (ex leases) was around £4m (FY20 £45.5m). Disruption and uncertainties for car retailers continue although trading in lockdown 3 was healthier than expected and should improve as more normal trading resumes in Q221, as indicated by the trading update on 25 May. Management expects FY21 adjusted PBT materially ahead of £34m.
INDUSTRY OUTLOOK
Market dynamics favour larger motor dealership groups against smaller independent Company description groups, which still command c 60% of the franchise market. Global manufacturing Lookers is vying to be the largest UK overcapacity still points to OEM support. However, the sector is normally rated for motor vehicle retailer, with its new car operations supported by the strength recessions and economic shocks like these and survived a dramatic crisis for the sector in of used and aftersales activities. It 2008/9. operates 150 franchises, representing 33 marques from 100 sites around the UK.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.0 21.3 169.0 2018 4828.3 117.1 42.8 8.41 7.8 2.1 Relative* 0.1 17.1 131.9 2019 4787.2 90.9 4.2 0.84 78.0 1.9 * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Andy Chambers 2021e N/A N/A N/A N/A N/A N/A
Sector: Financials LXi REIT (LXI) Price: 142.2p Market cap: £884m INVESTMENT SUMMARY Market LSE LXi proposes to raise c £75m through a share placing, also providing a PrimaryBid offering aimed at retail investors. The offer price of 133p is 2.3% premium to 1 June NAV/share and Share price graph (p) a 7.9% discount to the pre-offer price. The unaudited NAV/share at 1 June of 130p was 3.4% up on 31 March, with valuation gains across all sectors, but mostly industrial, and a 9% gain on assets acquired since 31 March. Total deployment since the £125m equity raise in March has now reached c £170m, across 13 separate transactions in structurally supported sectors, and the proceeds of the proposed issue will be directed towards assets from an identified pipeline of mostly off-market opportunities amounting to c £125m. The pipeline comprises nursery schools, grocery stores, and drive-thru coffee outlets; all benefitting from long leases, with rents linked to inflation or subject to fixed uplifts, with an average net initial yield of 5.5%. Company description INDUSTRY OUTLOOK LXi REIT is an externally managed UK REIT investing in high-quality, smaller lot size (£5–15m) assets, let on long The pandemic and Brexit contribute to a highly uncertain UK economic outlook. Long index-linked leases to strong financial upwards-only, mostly index-linked or fixed uplift leases (95%) provide significant income covenants across a range of sectors with defensive characteristics. protection against inflation and should mitigate the cyclical volatility in capital values historically exhibited by the commercial property market. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 4.6 15.6 23.6 2020 38.5 31.9 30.5 6.3 22.6 28.7 Relative* 4.7 11.6 6.5 2021 42.8 36.9 39.2 7.5 19.0 30.6 * % Relative to local index Analyst 2022e 57.6 49.8 47.8 7.7 18.5 18.5 Martyn King 2023e 59.4 51.4 50.1 8.1 17.6 21.3
Edison Insight | 24 June 2021 39 Sector: General retailers Marshall Motor Holdings (MMH) Price: 192.0p Market cap: £150m INVESTMENT SUMMARY Market AIM Marshall Motor Holdings has grown to rank seventh among UK automotive retailers. Strong brand coverage, excellent relationships with major car brands and a strong balance sheet Share price graph (p) support continued strategic development. Challenges remain for 2021 (eg supply chain issues), but a strong first four months trading was reported at the AGM. Revenues rose 33% and volume outperformance continued for both new and used segments. With lockdown 3 lifted in early April management expects FY21 adjusted PBT of at least FY19's £21.1m after repaying the £4m of government support received this year. The balance sheet remains healthy and dividends should resume at the half year.
INDUSTRY OUTLOOK
Market dynamics favour larger motor dealership groups against smaller independent Company description groups, which still command c 60% of the franchise market. The large rating discount to the Marshall Motor is the seventh largest General Retailers Index is generally a reflection of concerns about economic recession. UK motor retailer, operating 113 franchises across 22 brands. It is one Shocks like the current COVID-19 pandemic are more challenging, but may throw up of six UK dealership groups that opportunities in the future. represent each of the top five volume and premium brands and has a strong presence in eastern and southern England. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 11.3 23.9 56.7 2019 2276.1 52.0 22.1 22.9 8.4 3.4 Relative* 11.5 19.5 35.1 2020 2154.4 53.4 20.9 21.1 9.1 1.7 * % Relative to local index Analyst 2021e 2296.5 52.2 22.2 22.3 8.6 6.2 Andy Chambers 2022e 2368.4 52.8 22.8 22.9 8.4 4.3
Sector: Industrial support services Medserv (MDS) Price: €0.82 Market cap: €44m INVESTMENT SUMMARY Market Maltese Stock Exchange Medserv’s strategy to expand its geographic reach and range of services remains but COVID-19 and lower oil prices has deferred progress. The development of the new oil and Share price graph (€) gas assets in the eastern Mediterranean offer the prospect of recovery in the medium and longer term. The two major shareholders’ intentions to find a strategic investor has led to a proposed reverse takeover by Regis Holdings of Mauritius, which should underpin the balance sheet and provide expansion opportunities into sub-Saharan Africa. The transaction received Medserv shareholder approval and is expected to complete shortly when all other conditions are met.
INDUSTRY OUTLOOK
Medserv operates in the upstream oil and gas segment, providing onshore bases in the Company description Mediterranean, the Middle East and the Americas for onshore and offshore exploration and Medserv is a Malta-based provider of production customers. The acquisition of METS in February 2016 added onshore OCTG integrated offshore logistics and services in support of drilling services to the historical integrated offshore services offered in Malta, Cyprus and now operations in the Mediterranean, Egypt. As new territories are brought on stream the potential for future revenue growth MENA and South America. The 2016 acquisition of the METS companies remains, which the Regis deal should augment. diversified Medserv into onshore steel tube stockholding and servicing in the Middle East and beyond. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (0.6) 31.0 37.5 2018 36.2 6.3 (3.4) (6.76) N/A 6.7 Relative* (0.4) 25.7 39.7 2019 68.7 11.5 1.1 1.2 68.3 6.5 * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Andy Chambers 2021e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 40 Sector: Investment companies Mercia Asset Management (MERC) Price: 31.2p Market cap: £138m INVESTMENT SUMMARY Market AIM Mercia has built a sustainably profitable, cash-generative, specialist asset manager, with high levels (90%+) of contracted revenue. Mercia's portfolio is now sufficiently mature to Share price graph (p) start to generate more frequent, attractive exits. We believe the valuation should continue to rise as the market starts to appreciate this attractive, dividend-paying business, offering increasing upside from portfolio realisations. In its April trading update, management estimated that FY21 PAT (including disposals) would be over £23m, with year-end cash of £49m after the OXGENE disposal.
INDUSTRY OUTLOOK
Mercia's management has set out a clear vision for the company, with the acquisition of NVM’s VCT business accelerating Mercia's transition towards managing fee-paying Company description third-party funds. COVID-19 fears have abated and technology sector valuations remain Mercia Asset Management is a strong. Growth in FUM and profitability, as well as consistency of NAV performance, regionally focused specialist asset manager. Its stated intent is to become realisations and exits are the key metrics by which to judge success. the leading regional provider of supportive balance sheet, venture, private equity and debt capital in transaction sizes typically below £10m.
Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (6.0) 0.8 62.3 2019 10.7 (1.4) 3.0 1.00 31.2 N/A Relative* (5.9) (2.7) 39.9 2020 12.7 0.2 (15.5) (4.55) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Richard Williamson 2022e N/A N/A N/A N/A N/A N/A
Sector: Mining Monarch Mining Corporation (GBAR) Price: C$0.85 Market cap: C$60m INVESTMENT SUMMARY Market TSX Monarch Gold (MQR) sold its Wasamac and Camflo assets to Yamana for C$200m but retains a suite of potentially high-return projects as Monarch Mining, which it spun out in Share price graph (C$) January 2021. Its portfolio is located in the established and highly prospective Abitibi gold belt. Beaufor mine and the Beacon mill is planned to re-start production by June FY22 with minimal capex. Once in production, its cash flows plus existing cash will be invested in Croinor, due to start up in FY24. Our valuation is C$0.99/share comprising C$0.69 for Beaufor and Croinor and C$0.30/share for second tier assets McKenzie Break and Swanson. This will change with private placements for cash (C$6m raised in June 2021) and further share issues as the production start approaches in the next 12 months.
INDUSTRY OUTLOOK
Company description Canada ranks second in the world and Quebec ranks top quartile overall in the 2020 Fraser Monarch Mining Corporation is a Institute index of mining attractiveness. M&A activity in the region has picked up in recent Canadian gold explorer with one past producing asset, one major near-term years, with the QMX Gold acquisition in January implying a valuation C$170/oz and a peer project and two second tier projects in group trading at an average of C$61/oz versus Monarch at C$49/oz at the time of our the Abitibi, Quebec, gold belt. initiation.
Y/E Sep / Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (C$m) (C$m) (C$m) (c) (x) (x) % 1m 3m 12m Actual 0.0 (6.6) N/A 2019 N/A N/A N/A N/A N/A N/A Relative* (2.5) (12.0) N/A 2020 N/A N/A N/A N/A N/A N/A * % Relative to local index Analyst 2021e 0.0 (3.8) (4.0) (5.9) N/A N/A Rene Hochreiter 2022e 21.0 (2.8) (3.2) (4.6) N/A N/A
Edison Insight | 24 June 2021 41 Sector: Consumer support services Mondo TV (MTVI) Price: €1.57 Market cap: €69m INVESTMENT SUMMARY Market Milan Stock Exchange Mondo TV Group has had a strong start to the year, with continuing deals on its key properties, including MeteoHeroes, Grisù and Agent 203. New contracts include a first to Share price graph (€) develop, produce and distribute a video game based on MeteoHeroes for Sony from the group’s upgraded studio subsidiary in the Canary Islands. The funding round from Atlas, completed in Q121, has put the group on a sound financial footing. With its extensive library and a strong front list, Mondo TV is in a good position to benefit from the continued appetite for content from broadcasters and streamers.
INDUSTRY OUTLOOK
Structural changes to the market mean strong demand in the short to medium term. The rapid take-up of video on demand (VoD) and streaming VoD (SVoD) globally has fuelled a Company description well-documented thirst for content from the major players, with new entrants continuing. Mondo TV is a global media group Consolidation among the larger US and global players highlights the need for quality focused on the production, acquisition and exploitation of animated children’s content for regional broadcasters and streamers. High-quality animated series can drive television series. It owns the rights to new subscriptions and stimulate viewer loyalty. Children’s content is a key element of the >1,600 TV episodes and films, which it distributes across 75 markets. various providers’ offerings.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 4.5 13.6 (24.1) 2019 23.1 16.4 6.2 11.3 13.9 10.8 Relative* 2.8 8.6 (41.8) 2020 24.7 18.8 6.4 13.2 11.9 4.9 * % Relative to local index Analyst 2021e 29.2 24.6 10.5 15.0 10.5 4.2 Fiona Orford-Williams 2022e 31.3 27.4 12.8 17.3 9.1 3.2
Sector: General industrials Mytilineos (MYTI) Price: €15.82 Market cap: €2261m INVESTMENT SUMMARY Market Athens Stock Exchange Mytilineos is a leading industrial company with international presence in all five continents. Mytilineos’s FY20 results showed a strong H2 turnaround. This not only demonstrates that Share price graph (€) the company's strategy is resilient and capable of withstanding headwinds from the ongoing pandemic, but also provides a platform for solid performance in 2021; recently published Q121 results show group earnings in line with Q120. Strong maturing pipelines of renewables and sustainable engineering projects should drive growth in these businesses. Mytilineos successfully issued its first 'green bond' of €500m priced at 2.25% with maturity in 2026, which will help fund significant investments in energy transition and sustainability. In June, it announced a 131MW solar EPC contract for Total Eren in Uzbekistan.
INDUSTRY OUTLOOK
Company description Mytilineos possesses a portfolio of assets that enjoy low costs. CCGTs benefit from access Mytilineos is a leading industrial to cheap natural gas and low production costs for both alumina/aluminium allow the company with international presence in all five continents. The company is metallurgy business to be strongly cash flow generative. active in Metallurgy, Power & Gas, Sustainable Engineering Solutions and in Renewables & Storage Development, operating via a unique synergistic business model. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 5.5 20.1 99.1 2019 2256.0 313.0 180.0 103.0 15.4 9.3 Relative* 4.9 12.0 45.7 2020 1899.0 315.0 N/A 91.0 17.4 N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A James Magness 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 42 Sector: Technology Nanoco Group (NANO1) Price: 24.2p Market cap: £74m INVESTMENT SUMMARY Market LSE Nanoco has signed an extension to its development project with a major European customer, which we have previously inferred is STMicroelectronics (ST). The first phase of Share price graph (p) the project, developing a new generation of nanomaterials for potential use in infra-red sensing applications, completed successfully in H121. Nanoco is now working on the second phase, optimising these materials, which is scheduled to complete in Q122. If successful, this phase could lead to production scale-up and eventual volume production in calendar H222 (FY23), using Nanoco’s existing nanomaterials facility in Runcorn, which has capacity to output materials worth £100m per year.
INDUSTRY OUTLOOK
Nanoco has provided an update on the litigation against Samsung for the alleged wilful Company description infringement of the group’s IP. The US Patent Trial and Appeal Board (PTAB) has agreed to Nanoco is a global leader in the Samsung’s request to review the validity of the five patents in the case. In our view this development and manufacture of cadmium-free quantum dots and other development does not significantly swing the likely outcome of the court case one way or nanomaterials. Its platform includes c the other, though it could possibly delay the final outcome by a number of months. 740 patents. Focus applications are advanced electronics, displays, lighting and bio-imaging.
Y/E Jul Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.8 15.5 69.8 2019 7.1 (3.8) (5.0) (1.34) N/A N/A Relative* 1.0 11.5 46.4 2020 3.9 (2.9) (4.9) (1.38) N/A N/A * % Relative to local index Analyst 2021e 1.9 (2.6) (3.9) (0.99) N/A N/A Anne Margaret Crow 2022e 2.0 (2.2) (3.6) (0.97) N/A N/A
Sector: Mining Newmont Corporation (NEM) Price: US$62.62 Market cap: US$50169m INVESTMENT SUMMARY Market New York Stock Exchange Newmont is the world’s largest gold mining company with forecast production of 6.5Moz in FY21 plus a further 1.3Moz AuE of co- and by-products out of attributable (end-FY20) Share price graph (US$) reserves of 94.2Moz and reserves & resources of 195.4Moz in top tier jurisdictions. It seeks to distinguish itself from its peers via its high environmental, social and governance (ESG) standards, its management strength and experience, its operating model, its capital discipline, its track record of returns (eg its market leading dividend), its methodical approach to project development and its conservatism (eg reserves calculated at US$1,200/oz).
INDUSTRY OUTLOOK
Newmont has a number of sources of organic growth plus three major new projects in the Company description form of Tanami Expansion 2, Ahafo North and Yanacocha Sulphides that we forecast will Newmont Corporation is the world’s result in a c 50% increase in pre-financing cash flows at NEM by FY25, supporting our leading gold company with a world-class portfolio of assets in North absolute valuation of the company of US$78.08/share. Q121 results were materially ahead and South America, Australia and of our prior expectations. Africa. It is the only gold producer in the S&P 500 Index and is widely recognised for its ESG practices and as a leader in value creation, safety and mine execution. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (15.8) 0.6 12.8 2019 9740.0 3734.0 3693.0 131.6 47.6 16.1 Relative* (16.6) (5.5) (15.7) 2020 11497.0 5537.0 3143.0 265.5 23.6 10.3 * % Relative to local index Analyst 2021e 12160.0 5880.0 3098.0 269.0 23.3 11.3 Charles Gibson 2022e 12374.0 6042.0 3437.0 264.4 23.7 10.6
Edison Insight | 24 June 2021 43 Sector: General industrials Norcros (NXR) Price: 315.0p Market cap: £255m INVESTMENT SUMMARY Market LSE Norcros reported FY21 results in line with guidance raised in its pre-close statement. In a COVID-19 affected year underlying PBT of £30.6m exceeded the £28.8m attained in FY20. Share price graph (p) While not quite back to FY19 levels, this is a significant achievement backed by moving into a net cash position at the year end and the declaration of an 8.2p dividend for the year (all as a final DPS, having passed the interim) which was stronger than we anticipated. UK EBIT was above both FY20 & FY19 with an improved margin of 12.2% (FY20: 10.8%, FY19: 11.6%) while South African profitability was down marginally in underlying local FX (slightly more so in sterling). Cash generation for the year was in excess of £40m, resulting in a £10m end FY21 net cash position (from £36m net debt twelve months earlier). Our estimates are under review.
INDUSTRY OUTLOOK Company description Norcros is a leading supplier of RMI has been a stronger sub-sector during/exiting the UK COVID-19 lockdown phase while showers, enclosures and trays, tiles, taps and related fittings and new residential new-build gathered momentum more gradually. The South African economy accessories for bathrooms, kitchens, has faced a number of challenges; wider distribution of wealth and an emerging middle washrooms and other commercial environments. It has operations in the class should benefit consumer spending over time. Management's 2025 financial targets UK and South Africa, with some export activity from both countries. targeted £600m revenue with a balanced UK/overseas split with sustained ROCE of 15%+. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 12.5 20.2 99.4 2019 331.0 42.2 30.9 29.6 10.6 N/A Relative* 12.7 16.0 71.8 2020 342.0 38.8 27.1 26.1 12.1 N/A * % Relative to local index Analyst 2021e 324.5 38.7 28.0 26.9 11.7 N/A Toby Thorrington 2022e 337.5 41.4 31.1 29.9 10.5 N/A
Sector: Financials Numis Corporation (NUM) Price: 360.0p Market cap: £388m INVESTMENT SUMMARY Market LSE In May Numis reported a strong H121 performance with revenue of £115.4m, up 83% versus H120. This reflected increased levels of capital markets activity together with market Share price graph (p) share gains for the Equities business. Investment banking revenue more than doubled to £82m and Equities revenue was up 27%. Costs increased by 42%, mainly driven by variable compensation. Pre-tax profit of £39.3m was over five times the H120 level, demonstrating operational leverage. EPS increased from 5.5p to 25.7p after a higher tax charge. The dividend was unchanged at 5.5p in line with the board policy of maintaining dividends and using share buybacks or special dividends to return excess capital where appropriate.
INDUSTRY OUTLOOK
Company description For H221 Numis reports a strong pipeline across investment banking activities, with a Numis is one of the UK's leading broader diversification by sector evident as the market gains confidence. Adverse pandemic independent investment banking groups, offering a full range of or economic developments could prevent delivery of the pipeline, and conservatively we research, execution, equity capital have assumed some normalisation in H220 revenues, only increasing our FY21 earnings markets, corporate broking and advisory services. It employs c 290 estimate modestly. For the longer term, Numis continues to invest in staff to strengthen staff in offices in London and New York. capacity and plans to open a Dublin office to address opportunities in Europe. Y/E Sep Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (2.4) (4.3) 17.7 2019 111.6 15.3 12.4 8.1 44.4 N/A Relative* (2.3) (7.6) 1.4 2020 154.9 39.6 37.1 26.7 13.5 N/A * % Relative to local index Analyst 2021e 196.6 60.5 55.1 37.0 9.7 N/A Andrew Mitchell 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 44 Sector: Investment companies Ocean Wilsons Holdings (OCN) Price: 1135.0p Market cap: £401m INVESTMENT SUMMARY Market LSE Ocean Wilsons Holdings (OCN) reported FY20 earnings of $48m down 21% y-o-y, due to the impact of COVID-19 on both Wilsons Sons' operations and the significant BRL Share price graph (p) devaluation. The pandemic led to container terminal and towage volume dropping 1% and 0.4% y-o-y, respectively. However, there are good underlying trends of stronger prices in both towage and container terminals and we also note that volumes in the off-shore vessels grew 4.4%. The investment portfolio had a good year, beating its benchmark (up 4.4% in 2020) by 6.5%. The current 40% discount to a look-through valuation is above its long-term average in the mid-20s.
INDUSTRY OUTLOOK
The oil price recovery has been welcome news and improves Brazil’s deepwater pre-salt Company description industry's prospects for later this year. This will help businesses such as the offshore Ocean Wilsons Holdings is an support companies as well as towage. The coronavirus crisis initially hurt China and Asian investment company based in Bermuda. It has a controlling shipping, but the impact broadened as it became a pandemic and currently Brazil is lagging shareholding in Wilson Sons, a quoted in its vaccination programme. Our FY21 forecasts remain suspended until we get more maritime services company in Brazil, and holds a portfolio of international clarity on the impact of COVID-19. investments.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 21.4 31.2 66.9 2019 406.1 147.9 95.6 169.3 9.4 3.6 Relative* 21.6 26.6 43.9 2020 352.8 135.7 74.6 109.5 14.6 3.9 * % Relative to local index Analyst 2021e 388.4 167.1 107.8 178.2 9.0 3.4 Pedro Fonseca 2022e 409.4 183.8 129.8 200.1 8.0 3.2
Sector: Travel & leisure OPAP (OPAP) Price: €12.98 Market cap: €4432m INVESTMENT SUMMARY Market Athens Stock Exchange OPAP has exclusive licences across a number of its gaming products; the earliest is due to expire in 2026 and the latest in 2036. The strategy is to grow revenue by enhancing its Share price graph (€) products while accelerating the move online. In Q121 revenue declined by 47% y-o-y and EBITDA declined by 26%, due to COVID-related store closures. We downgraded our FY21 EBITDA forecast by 13% due to more COVID-related closures of the land-based locations than previously expected in our December 2020 update. For FY21 and FY22 we look for a strong recovery post COVID, which is helped by underlying growth as well as the contribution from Stoiximan, which is now fully consolidated.
INDUSTRY OUTLOOK
The Hellenic Gaming Commission estimates that the total legal Greek gaming market Company description amounted to €1.6bn gross gaming revenue (GGR) in 2020, -27% y-o-y due to COVID, of OPAP was founded in 1958 as the which OPAP land-based games comprised €0.9bn GGR. Regulation of the online gaming Greek national lottery and it is the exclusive licensed operator of all market is in progress; HGC has granted online licences to OPAP and Stoiximan. numerical lotteries, sports betting and horse racing. OPAP listed in 2001 and was fully privatised in 2013. Sazka Group has a 44.1% stake and significant board representation. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 7.6 13.2 47.5 2019 1619.9 411.2 286.6 68.0 19.1 13.6 Relative* 7.1 5.5 7.9 2020 1129.8 263.6 133.4 32.0 40.6 19.6 * % Relative to local index Analyst 2021e 1581.6 575.0 408.0 86.0 15.1 10.0 Russell Pointon 2022e 2074.6 772.4 609.6 129.0 10.1 7.0
Edison Insight | 24 June 2021 45 Sector: Technology Osirium Technologies (OSI) Price: 25.5p Market cap: £7m INVESTMENT SUMMARY Market AIM Osirium reported revenue growth of 22.5% for FY20 and, as a result of cost-control measures taken to manage the business during the pandemic, reduced the EBITDA loss Share price graph (p) from £2.15m in FY19 to £1.36m in FY20. Bookings declined 14% y-o-y, although the company achieved record intake in Q120 and Q420 and has seen positive momentum so far this year, particularly in the healthcare sector. We have revised our forecasts to reflect lower operating costs and the recent fund raise, reducing our EBITDA loss forecast from £1.8m to £1.4m for FY21.
INDUSTRY OUTLOOK
The market for privileged access management (PAM) software is currently worth US$2.2bn and is forecast to grow to US$5.4bn by 2025 (source: KuppingerCole), with demand driven Company description by regulation, the shift to the cloud and adoption spreading to smaller organisations. The UK-based Osirium Technologies complexity of established solutions means fewer mid-market businesses use PAM software designs and supplies subscription-based cybersecurity than enterprises, so this is a market ripe for development. software. Its PAM platform includes privileged access, task, session and behaviour management. It recently launched a secure process automation solution and a privileged endpoint management solution. Y/E Oct / Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 15.9 2.0 13.3 2019 1.2 (2.2) (3.5) (19.45) N/A N/A Relative* 16.1 (1.6) (2.3) 2020 1.4 (1.4) (3.1) (12.85) N/A N/A * % Relative to local index Analyst 2021e 1.7 (1.4) (3.4) (11.19) N/A N/A Katherine Thompson 2022e 2.0 (1.2) (3.4) (9.79) N/A N/A
Sector: Financials OTC Markets Group (OTCM) Price: US$48.50 Market cap: US$571m INVESTMENT SUMMARY Market OTC QX In May OTCM reported a very strong first quarter with gross revenues of $26.1m, up 57% compared with Q120. Segmentally this was led by OTC Link (+210%), which benefited from Share price graph (US$) elevated US equity trading levels, but Market Data Licensing (+17%) and Corporate Services (+21%) were also strong. Expenses, including redistribution and transaction-based costs, were up 46%. This left pre-tax profit up 87% and, after a higher tax charge, diluted EPS increased by 78%. A maintained second quarter dividend of $0.15 was announced.
INDUSTRY OUTLOOK
Following Q1 there are signs that the level of US equities trading activity may be beginning to normalise, and we have assumed that this continues while acknowledging that it is not possible to forecast this with any confidence. This affected our estimates for OTC Link and Company description to some extent Market Data Licensing. The positive trend in corporate clients joining OTC Markets Group operates the OTCQX and OTCQB is likely to have longer-lasting benefits and work developing new data OTCQX, OTCQB and Pink financial markets for over 11,000 US and global products and offering new functionality to OTC Link clients should also be helpful through securities. OTC Link LLC, a member of market cycles. Our 2021 estimated EPS increased by 23%, while, reflecting our FINRA, operates OTC Link ATS and OTC Link ECN, both SEC-registered assumptions about normalisation, the 2022 estimate only rose slightly (+2%). Alternative Trading Systems. In FY20 c 82% of revenues were of a subscription-based recurring nature Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF and 63% in Q121. Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 10.2 21.4 58.0 2019 62.8 19.4 18.0 124.7 38.9 24.6 Relative* 9.2 14.1 18.1 2020 71.2 23.2 21.4 153.4 31.6 19.2 * % Relative to local index Analyst 2021e 85.9 30.3 28.6 193.2 25.1 20.3 Andrew Mitchell 2022e 77.7 27.4 25.6 172.6 28.1 17.9
Edison Insight | 24 June 2021 46 Sector: Property Palace Capital (PCA) Price: 260.0p Market cap: £120m INVESTMENT SUMMARY Market LSE FY21 results were robust, with a clear improvement in the second half. Adjusted PBT of £7.5m included a £0.9m receivables provision, with H221 improving to £4.5m versus £3.1m Share price graph (p) in H121. EPRA NTA per share was 350p (end-FY20: 364p) but also improved in H221 (from 347p at end-H121). With a good level of rent collection continuing, Q421 DPS was increased by 20% to a level that management hopes to at least maintain through FY22. The flagship Hudson Quarter (HQ) development in York completed in April on budget and we expect this to be a significant driver of increasing returns over the next three years. Revenues from the sales of HQ residential apartments and from the non-core disposal programme will provide an opportunity for accretive reinvestment and debt reduction.
INDUSTRY OUTLOOK
Company description The commercial property market is cyclical, historically exhibiting substantial swings in Palace Capital is a UK property capital values through cycles while income returns have been more stable. The pandemic investment company. It is not sector-specific and looks for and Brexit have created significant economic and market uncertainty during the past year, opportunities where it can enhance but GDP is forecast to rebound strongly as the lockdown eases and interest rates remain long-term income and capital value through asset management and low maintain a significant commercial property yield premium. strategic capital development in locations outside London. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 6.1 14.3 47.7 2020 21.1 14.6 8.0 17.5 14.9 7.6 Relative* 6.3 10.3 27.3 2021 17.3 10.6 7.5 16.4 15.9 10.6 * % Relative to local index Analyst 2022e 16.7 9.8 6.6 14.3 18.2 13.8 Martyn King 2023e 17.4 10.6 7.5 16.4 15.9 11.3
Sector: Mining Pan African Resources (PAF) Price: 17.6p Market cap: £340m INVESTMENT SUMMARY Market AIM Pan African (PAF) produced a forecast beating 179.6koz gold in FY20, resulting in net debt declining by 52.6% in H220 alone to just US$62.0m and allowing it to increase its dividend Share price graph (p) more than five-fold so that it is among the top 20 yielding precious metals companies, globally. Since then, EPS has almost doubled again to 2.11c/share in a record H121 after production of 98.4koz (cf updated and increased FY21 guidance of 195koz).
INDUSTRY OUTLOOK
Based on its currently producing assets, we value PAF at 38.19c (27.46p) per share plus the value of 19.2m underground Witwatersrand ounces (estimated 0.22-5.24c/share). Near-term development opportunities include Egoli (ZAR2.01bn NPV and 50.1% IRR), the Evander 8 Shaft Phase 1 (ZAR126.1m NPV) & 2 projects, Mintails' assets (533koz over Company description 12yrs at US$800/oz AISC), the Prince Consort shaft pillar, the Fairview sub-vertical shaft Pan African Resources has three (7–10koz pa) and the Royal Sheba project (c 30koz pa). NB PAF's mining rights at major producing precious metals assets in South Africa: Barberton Barberton were recently renewed for a period of 30 years. (target output 95koz Au pa), the Barberton Tailings Retreatment Project (20koz) and Elikhulu (55koz), now incorporating the Evander Tailings Retreatment Project (10koz). Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (10.6) (0.5) 6.8 2019 218.8 65.5 37.1 1.64 15.1 8.0 Relative* (10.4) (3.9) (8.0) 2020 274.1 115.2 80.8 3.78 6.6 6.5 * % Relative to local index Analyst 2021e 357.0 157.1 122.2 4.24 5.8 3.5 Charles Gibson 2022e 336.2 177.1 151.4 5.43 4.6 2.8
Edison Insight | 24 June 2021 47 Sector: General industrials paragon (PGN) Price: €10.95 Market cap: €50m INVESTMENT SUMMARY Market Xetra Recovery is strengthening following the COVID-19 disruptions in H120 while the sale process of its remaining stake in Voltabox continues but has yet to be finalised. In FY20 Share price graph (€) paragon Automotive revenues were €127.2m and the EBITDA margin was 10.8%, both ahead of management expectations following a record H220 performance. It benefited from management actions taken to sustain earnings and improve cost efficiency. Q121 revenues were €39.2m, 33% up on Q120 and 29% ahead of Q119 and Q221 should also exceed Q220. The 15.4% Q121 EBITDA margin is ahead of FY21 guidance of 12–15%. Management has indicated sales for Automotive should be €145m in FY21 and FCF of c €12m. The company is expected to release FY20 and full Q121 results on 20 July.
INDUSTRY OUTLOOK
Company description We believe paragon's identification of, and investment in, solutions to address megatrends paragon designs and supplies in global automotive markets is understood by investors. It is growing faster than its markets automotive electronics and solutions, selling directly to OEMs, including due to innovative products that are driving changes in customer perceptions, creating new sensors, interior, digital assistance and growth engines for the group. These should reassert themselves as the COVID-19 body kinematics. Production facilities are in Germany, the US and China. It pandemic wanes. retains 58% of Voltabox, which supplies battery power systems. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (0.9) 14.1 9.5 2018 187.4 30.3 14.8 144.58 7.6 N/A Relative* (1.3) 9.1 (12.9) 2019 192.2 17.2 (8.5) (115.00) N/A N/A * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Andy Chambers 2021e N/A N/A N/A N/A N/A N/A
Sector: Property Phoenix Spree Deutschland (PSDL) Price: 400.0p Market cap: £384m INVESTMENT SUMMARY Market LSE With the Berlin rent-cap ruled unconstitutional PSD is able to resume its reversionary rental strategy to drive income and capital growth while crystallising a part of this value through Share price graph (p) selected condominium sales at a premium to book value. Despite the market disruption caused by the rent cap FY20 net attributable earnings increased by c one-third to €29.8m or c 31 cents per share (FY19: c 22 cents). The external property valuation prepared by JLL fully reflected the rent cap for a full five-year term yet still showed a like-for-like increase of 6.3%, driving EPRA net tangible asset (EPRA NTA) per share growth of 7.3%. Including DPS paid the EPRA NTA total return in the year was 8.8%. Sector M&A highlights the positive prospects for the Berlin residential property market, a view shared by PSD. Seeking to ensure that the PSD share price better reflects the intrinsic value of the company’s portfolio and future prospects the board announced a significant and more active share Company description repurchase programme. Phoenix Spree Deutschland is a long-term investor in mid-market INDUSTRY OUTLOOK residential property in Berlin, targeting reliable income and capital growth. Its With strong demand for housing in Berlin driven by net migration and a relative lack of core strategy is to acquire unmodernised apartment blocks that supply, free market rents and capital values have steadily increased, while the rise in may be improved to the benefit of tenants, generating attractive returns condominium prices appears to be continuing. for shareholders. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 8.1 23.5 38.4 2019 22.6 44.6 28.6 21.8 21.4 N/A Relative* 8.3 19.1 19.3 2020 23.9 48.3 37.9 30.1 15.5 N/A * % Relative to local index Analyst 2021e 28.2 51.5 44.3 37.1 12.5 N/A Martyn King 2022e 28.1 51.6 44.4 36.8 12.6 N/A
Edison Insight | 24 June 2021 48 Sector: Financials Picton Property Income (PCTN) Price: 88.5p Market cap: £485m INVESTMENT SUMMARY Market LSE A resilient FY21 performance saw EPRA EPS maintained at 3.7p and a 4p increase in EPRA NTA to 97p. NAV total return was 6.6%. At the property level, performance was well Share price graph (p) ahead of the MSCI UK Quarterly Index, maintaining a long track record of outperformance, and benefitting from high industrial exposure and a low retail & leisure weighting. FY21 DPS of 2.8p was 134% covered by EPRA earnings and the current 0.8p quarterly run rate (an annualised 3.2p) is now 90% of the pre-pandemic level, a level which the board hopes to achieve an early return to. Net LTV remains low (21%) with £50m of undrawn borrowing facilities available, providing opportunities to grow through accretive acquisition as well as reversionary rent capture, including the recent £0.5m pa letting of the remaining vacant office space at the Stanford building.
INDUSTRY OUTLOOK Company description Picton Property Income is an internally The commercial property market is cyclical, historically exhibiting substantial swings in managed UK REIT that invests in a diversified portfolio of commercial capital values through cycles while income returns have been more stable. The pandemic property across the UK. It is total and Brexit have created significant economic and market uncertainty during the past year, return driven with a strong income focus and aims to generate attractive but GDP is forecast to rebound strongly as the lockdown eases and interest rates remain returns through proactive management of the portfolio. low maintaining a significant commercial property yield premium. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.4 0.0 29.2 2020 33.6 28.1 22.4 3.66 24.2 22.6 Relative* 2.6 (3.5) 11.4 2021 33.5 28.1 33.8 3.68 24.0 18.6 * % Relative to local index Analyst 2022e 33.9 28.2 42.0 3.74 23.7 16.4 Martyn King 2023e 35.2 29.2 40.2 3.93 22.5 15.6
Sector: General industrials PIERER Mobility (PMAG) Price: €73.00 Market cap: €1645m INVESTMENT SUMMARY Market Vienna PIERER Mobility is a leading manufacturer of powered two wheelers (PTWs) focused on premium markets through the KTM, HUSQVARNA and GASGAS motorcycle brands. With Share price graph (€) e-bikes it adds a new organic growth stream as urban e-mobility markets develop rapidly. Strong global demand for motorcycles and e-bikes continued in Q121. FY20 sales of €1.53bn beat expectations and EBIT was €107.2m, a margin of 7% despite the pandemic. The FY20 dividend increased to €0.5 a share. Following strong Q121 trading with revenues of €509m, guidance for FY21 sales increased to €1.85bn to €1.95bn, with EBIT margins of 8–9% and EBITDA margin of over 15%.
INDUSTRY OUTLOOK
PIERER Mobility’s historic target PTW market has been for motorcycles greater than 120cc Company description that retail for over €2,500. The segment represents 6m units or around 11% of the global PIERER Mobility (previously KTM PTW market. PIERER had a market share of around 9.5% of this market in 2019 with a Industries) is a leading manufacturer of powered two wheelers, focusing on record 280.9k registrations, up 10% on 2018; 66.2k were through the Indian jv partner, premium motorcycles and two-wheeled Bajaj. The market for e-bikes and scooters has grown strongly in Europe, supported by electric vehicles. With its well-known brands – KTM, HUSQVARNA and structural long-term trends especially cleaner transport solutions. GASGAS – it is the largest sports motorcycle manufacturer in Europe. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (0.4) 7.4 68.2 2019 1520.0 241.0 118.0 241.8 30.2 6.4 Relative* (1.0) (1.8) 17.2 2020 1530.0 239.0 91.0 155.1 47.1 5.2 * % Relative to local index Analyst 2021e 1829.0 306.0 143.0 262.1 27.9 8.3 Andy Chambers 2022e 2014.0 335.0 168.0 312.9 23.3 6.0
Edison Insight | 24 June 2021 49 Sector: Property Primary Health Properties (PHP) Price: 156.8p Market cap: £2086m INVESTMENT SUMMARY Market LSE A Q121 trading update showed the existing portfolio continuing to perform well, as expected. While acquisition activity has been light amid a highly competitive investment Share price graph (p) market, progress continues with rent reviews and asset management projects, forward-funded developments and the recently acquired direct development pipeline. Robust (more than 99%) rent collection supports growing quarterly DPS payments; 1.55p per share in Q121 with an annual target of a fully covered 6.2p (+5.1% vs FY20). We expect acquisitions to pick up and with c £335m of available funding headroom at end-Q121 and a strong c £230m off-market pipeline of potential acquisitions PHP is well-placed to help meet the need for primary healthcare investment and grow further.
INDUSTRY OUTLOOK
Company description The sector enjoys strong income visibility, with long leases and upwards-only rents, 90% Primary Health Properties is a backed directly or indirectly by government bodies, with little exposure to the economic long-term investor in primary healthcare property in the UK and the cycle, or fluctuations in occupancy. Healthcare planning, with broad political support, Republic of Ireland. Assets are mainly already suggests strong underlying demand for modern healthcare properties in both the long-let to GPs and the NHS or the HSE, organisations backed by the UK UK and the Republic of Ireland while the pandemic highlights existing pressures and may and Irish governments, respectively. well lead to increased healthcare spending over the longer term. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.8 8.9 (1.8) 2019 115.7 103.4 59.7 5.5 28.5 18.2 Relative* 3.0 5.1 (15.3) 2020 131.2 118.0 73.1 5.8 27.0 16.7 * % Relative to local index Analyst 2021e 137.4 127.8 82.8 6.3 24.9 16.5 Martyn King 2022e 142.4 132.7 86.6 6.5 24.1 15.9
Sector: Financials ProCredit (PCZ) Price: €8.06 Market cap: €475m INVESTMENT SUMMARY Market Xetra ProCredit (PCB) has extensive experience in supporting SMEs in emerging economies (and strong ESG profile), with a focus on Southeastern (SEE) and Eastern Europe (EE) and Share price graph (€) banking operations in Ecuador. It streamlined its business in recent years, including a digital direct bank strategy for private clients and a reduced branch network and headcount. As macro conditions normalise further and PCB continues to grow its business, we expect it to realise its scaling potential and gradually reach its mid-term ROE target of 10%.
INDUSTRY OUTLOOK
While the SEE and EE region benefitted from secular GDP growth of 3–5% pa in the five years prior to COVID, the pandemic is expected to have triggered a recession with the IMF forecasting a 2.0% decline in Emerging and Developing Europe in 2020, rebounding to c Company description 4.4% growth in 2021. PCB’s in-depth, impact-oriented relationships with SME borrowers ProCredit Holding is a Germany-based (94% of loan book at end-March 2021), prudent credit risk management and solid capital group operating regional banks across Southeastern and Eastern Europe, as base (CET-1 ratio of 13.2% at end-March 2021) should help reduce the impact of macro well as in Ecuador. The banks focus headwinds. Longer term, PCB’s business should be assisted by the low banking sector on small and mid-size enterprises (SMEs) and private middle-income and penetration in the region (loan book to GDP of 40–45% on average vs >70% in Western high earners. At end-2020, the group’s total assets stood at €7.3bn. Europe). Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (6.5) (2.9) 33.2 2019 252.6 N/A 76.9 89.0 9.1 N/A Relative* (6.9) (7.1) 5.9 2020 223.5 N/A 52.1 70.0 11.5 N/A * % Relative to local index Analyst 2021e 242.9 N/A 66.2 91.6 8.8 N/A Milosz Papst 2022e 279.9 N/A 93.2 130.0 6.2 N/A
Edison Insight | 24 June 2021 50 Sector: General industrials Quadrise Fuels International (QFI) Price: 3.8p Market cap: £53m INVESTMENT SUMMARY Market AIM Quadrise successfully completed a pilot trial at a customer site in Morocco during calendar H220 and launched its biofuel variant, bioMSAR which produces 20–30% lower carbon Share price graph (p) dioxide (CO2) emissions as well as lower nitrogen oxide and particulates. The company is currently preparing for larger scale trials in Morocco, a pilot trial in Utah and on-vessel trials with MSC Shipmanagement. Management notes that these activities could potentially result in the first commercial shipments of MSAR by the end of calendar 2021. Management estimates it has the cash resources to progress the ongoing trial programmes to commercial revenues and positive sustainable cash flows by July 2022.
INDUSTRY OUTLOOK
There have been delays in receiving samples from the site in Utah. When Quadrise's Company description partner Greenfield started processing ore from the site in early April, it identified some Quadrise Fuels International is the adaptations to the process that were required to reach the target production rate, especially innovator, supplier and global licensor of disruptive residual oil technology during cold weather. The new equipment has been installed and tested, enabling Greenfield that produces a synthetic, enhanced to reach a production rate equivalent to 180 barrels of oil a day. heavy fuel oil called MSAR. The technology enables refiners to produce MSAR for use as a low-cost substitute for heavy fuel oil. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (18.5) 6.3 120.3 2019 0.0 (2.8) (3.0) (0.32) N/A N/A Relative* (18.4) 2.6 89.9 2020 0.0 (3.1) (3.4) (0.32) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Sector: Property Raven Property Group (RAV) Price: 29.0p Market cap: £168m INVESTMENT SUMMARY Market LSE As a growing and essential part of the supply chain, all of Raven’s warehouses continued to operate throughout 2020. Occupancy increased to 94% (FY19: 90%) and more than 99% of Share price graph (p) rents were collected. Rouble weakness obscured this strong operational progress in the sterling results, although underlying earnings, excluding FX movements, were £19.0m (FY19: £15.7m). The unadjusted IFRS loss was £14.2m. FY20 valuations edged up 0.5% in roubles but with yields high (c 11%), at a high premium to interest rates (despite the recent ant-inflationary 0.5% increase to 5.0%), and construction costs increasing, rent growth should increasingly drive capital growth. The repurchase of ordinary and preference shares from Invesco funds, in part through a new JV between the company and management, has completed following approval from shareholders and the tender offer repurchase shares in respect of the FY20 final distribution of 1.25p per was approved by the AGM. Company description INDUSTRY OUTLOOK Raven Property Group (formerly Raven Russia) invests mainly in Class A warehouses in Russia. It also owns The Russian economy has begun to recover from the negative impacts of the pandemic. three office buildings in St Petersburg, Strong demand for space, especially driven by e-commerce activity, combined with low a third-party logistics company in Russia and a residential development vacancy, a lack of new supply, and increased construction costs are positive indicators for company in the UK. increased rents and valuations. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.0) 1.8 (18.8) 2019 127.0 N/A 54.0 6.4 4.5 N/A Relative* (0.9) (1.8) (30.0) 2020 113.0 N/A (25.0) (6.9) N/A N/A * % Relative to local index Analyst 2021e 100.0 N/A 31.0 4.1 7.1 N/A Martyn King 2022e 102.0 N/A 22.0 2.5 11.6 N/A
Edison Insight | 24 June 2021 51 Sector: Financials Record (REC) Price: 94.8p Market cap: £189m INVESTMENT SUMMARY Market LSE Record's FY21 results were close to expectation. Management fees increased by 8% to £24.9m while total revenue was little changed at £25.4m versus £25.6m as performance Share price graph (p) fees were lower at £0.1m (FY20 £1.8m). Operating expenses increased by 11% to £15.7m reflecting, as expected, higher personnel costs (+20%) following prior year recruitment and promotions. Non-personnel costs were lower (-5%) as COVID-19 cut some expenditure. As a result, pre-tax profit was £6.2m (FY20 £7.7m) while basic EPS was 2.75p versus 3.26p. The ordinary dividend for the year is unchanged at 2.30p while a special dividend of 0.45p has been announced giving a total payment of 2.75p (versus 2.71p), in line with earnings per share.
INDUSTRY OUTLOOK
Company description The strong growth in AUME in FY21 creates a strong base for FY22. The diversity of Record is a specialist independent revenue has increased and there is potential for this trend to continue as new products are currency manager. It provides a number of products and services, launched, including a new EM Sustainable Finance fund in Q122. Work continues on including passive and dynamic introducing new software and technology to facilitate this and enhance efficiency and hedging, and a range of currency for return strategies, including funds and scalability. customised segregated accounts.
Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 10.2 48.1 159.7 2020 25.6 8.5 7.7 3.26 29.1 28.6 Relative* 10.4 43.0 123.9 2021 25.4 7.0 6.2 2.73 34.7 27.4 * % Relative to local index Analyst 2022e 30.6 11.4 10.5 4.36 21.7 21.2 Andrew Mitchell 2023e N/A N/A N/A N/A N/A N/A
Sector: Property Regional REIT (RGL) Price: 86.0p Market cap: £371m INVESTMENT SUMMARY Market LSE RGL recently declared a Q121 DPS of 1.6p, a 7% increase on Q420 (1.5p). Our FY21 forecast is 6.6p (vs 6.4p in FY20) comprising three quarterly payments of 1.6p and an Share price graph (p) increased Q4 DPS of 1.8p, consistent with the company’s plans to revert to distributions in line with its normal pattern. Increased DPS is supported by continuing strong rent collection from RGL’s diversified portfolio of attractively yielding regional property assets. RGL believes strongly in the future of good-quality regional offices let at affordable rents, the focus of future investment with remaining industrial asset earmarked for sale into a strong market. The existing office portfolio contains significant reversionary income potential (c £12m or more than 20% of gross contracted rents at end-FY20) and with the lockdown restrictions relaxing, RGL says it is seeing increasing engagement with potential occupiers.
INDUSTRY OUTLOOK Company description Regional REIT owns a highly The commercial property market is cyclical, historically exhibiting substantial swings in diversified commercial property portfolio of predominantly offices capital values through cycles while income returns have been more stable. The pandemic located in the regional centres of the and Brexit have created significant economic and market uncertainty during the past year, UK. It is actively managed and targets a total shareholder return of at least but GDP is forecast to rebound strongly as the lockdown eases and interest rates remain 10% with a strong focus on income. low maintain a significant commercial property yield premium. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 4.4 10.0 13.5 2019 55.0 44.1 30.6 7.8 11.0 N/A Relative* 4.5 6.1 (2.2) 2020 53.3 42.0 27.7 6.5 13.2 N/A * % Relative to local index Analyst 2021e 53.6 42.8 28.9 6.7 12.8 N/A Martyn King 2022e 55.3 44.5 30.4 7.0 12.3 N/A
Edison Insight | 24 June 2021 52 Sector: Oil & gas Renergen (RENJ) Price: ZAR20.25 Market cap: ZAR2380m INVESTMENT SUMMARY Market JSE Renergen secured final funding for Phase 1 of its Virginia Gas Project in H219. The project is now in the development phase, and first liquid production of LNG and helium is now Share price graph (ZAR) expected in H221. In January 2021, Renergen awarded contracts to carry out engineering studies for Phase 2, to be completed around Q221. Construction completion is estimated by late 2023, for which Renergen will require additional funding. The company also signed its first 'Direct to Customer' deal with German automotive supplier, iSi Automotive, to take helium from Phase 2. Our risked NAV stands at ZAR23.9/share, although this does not reflect the COVID-related project delays. In 2020, the MDR1 well was re-drilled, producing 164,000cf/d by April 2021 and the P007 exploration well tested at 200,000cf/d. Two wells, C3PO and R2D2 are currently being drilled (with a permit required to drill deeper in R2D2). An independent estimate from Sproule from July 2020 estimates that the Virginia Project Company description holds 2U (P50) prospective helium resources of 106bcf. Global helium demand is c 6bcf/pa. Renergen is an emerging producer of helium and liquefied natural gas INDUSTRY OUTLOOK (LNG), with existing production and sales of compressed natural gas. Renergen is targeting the heavy-duty LNG truck market which is a rapidly evolving market globally. The helium market remains under supplied in 2021, though significant additional supply from Russia and Qatar from 2022 could lead to oversupply from the mid-2020s. Y/E Feb Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (ZARm) (ZARm) (ZARm) (c) (x) (x) % 1m 3m 12m Actual (2.2) (5.8) 51.7 2018 2.9 (26.9) (27.1) (0.3) N/A N/A Relative* 0.2 (4.2) 24.7 2019 3.0 (43.2) (46.9) (0.5) N/A N/A * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Ian McLelland 2021e N/A N/A N/A N/A N/A N/A
Sector: General industrials Renewi (RWI) Price: 51.7p Market cap: £414m INVESTMENT SUMMARY Market LSE FY21 results were slightly above our expectations (which were raised twice in H2) with revenue and EBIT c 4% and c 7% higher than anticipated respectively. With lower finance Share price graph (p) costs also, group PBT of €47m was c €8m above our estimate. Good momentum was seen in Commercial Waste and the other two divisions faced varied challenges though both made positive EBIT contributions in the year. Year-end core net debt of €333m (2.1x EBITDA) was significantly lower than end FY20 levels driven broadly equally by underlying cash generation and permitted tax payment deferrals. Management comments indicated increasing confidence in the FY22 trading outlook. Our estimates are under review.
INDUSTRY OUTLOOK
The Dutch waste market, accounting for the largest single business within Renewi, was Company description growing as the economy recovered from cyclical lows ahead of the coronavirus outbreak. Renewi is a waste-to-product company with operations primarily in the Netherlands, Belgium and the UK. Its activities span the collection, processing and resale of industrial, hazardous and municipal waste.
Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 3.8 8.8 90.4 2019 1780.7 179.7 63.1 6.0 N/A N/A Relative* 4.0 5.0 64.1 2020 1775.4 167.1 54.3 5.4 N/A N/A * % Relative to local index Analyst 2021e 1627.1 149.3 39.2 3.6 N/A N/A Toby Thorrington 2022e 1691.3 159.0 46.4 4.3 N/A N/A
Edison Insight | 24 June 2021 53 Sector: Technology Riber (ALRIB) Price: €1.58 Market cap: €34m INVESTMENT SUMMARY Market Euronext Paris Riber’s FY20 results showed the adverse impact of customer uncertainty caused by the coronavirus pandemic and the French government’s tightening up on exports to China. Share price graph (€) FY20 revenues were €3.2m lower year-on-year at €30.2m, reflecting fewer MBE system deliveries, minimal evaporator sales and a 24% jump in service revenues. Total revenues would have been over €31m had the French government not refused export licences for R&D systems and certain types of spares to China. Adjusted operating profit reduced by only €0.2m to €0.7m.
INDUSTRY OUTLOOK
At end-March 2021 the order book totaled €17.3m. This included orders for four MBE systems totalling €9.6m, all of which are scheduled for delivery in FY21. The total excludes Company description an additional order for a production system priced at several million euros announced in Riber designs and produces molecular April, which is also for delivery in FY21. This production unit will be the fifth MBE system the beam epitaxy (MBE) systems and evaporator sources and cells for the Asian industrial client has ordered from Riber and will be used to make electronic and semiconductor industry. This optoelectronic devices. equipment is essential for the manufacturing of compound semiconductor materials that are used in numerous high-growth applications. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (8.7) (1.3) 1.0 2019 33.5 1.7 0.9 3.07 51.5 N/A Relative* (11.5) (8.2) (23.2) 2020 30.2 2.1 0.7 2.49 63.5 N/A * % Relative to local index Analyst 2021e 29.1 2.4 0.9 3.03 52.1 N/A Anne Margaret Crow 2022e 32.8 3.4 1.8 6.48 24.4 N/A
Sector: Financials S&U (SUS) Price: 2670.0p Market cap: £324m INVESTMENT SUMMARY Market LSE S&U’s update for the February-May period indicated that the group is continuing a strong recovery as motor and housing markets revive. Profitability for both Advantage motor Share price graph (p) finance and Aspen property bridging were ahead of group projections. Advantage saw a smaller than expected bounce in transactions in April following the opening of dealerships but advances have accelerated with good new business loan quality. The group is optimistic that Advantage will reach its advances and profit-growth targets for the year. Aspen is benefitting from its participation in CBILS lending and its net receivables stand at over £50m (£34.1m at end January). Aspen profitability reached a record level in Q122.
INDUSTRY OUTLOOK
Current trends for both businesses are encouraging but developments in the pandemic and Company description macroeconomic background remain sensitivities for the group. Underpinning the S&U’s Advantage motor finance longer-term outlook for Advantage is continued work to adapt and improve the business. business lends on a simple HP basis to lower- and middle-income groups Aspen Bridging also looks to be on track to make a material contribution to group profits. who may have impaired credit records S&U's Q2 update is due 10 August. restricting access to mainstream products. It has c 63,000 customers. The Aspen property bridging business has been developing since its launch in 2017. Y/E Jan Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (0.7) 23.0 55.2 2020 89.9 40.4 35.1 239.4 11.2 65.3 Relative* (0.6) 18.7 33.8 2021 83.8 22.2 18.1 120.7 22.1 9.8 * % Relative to local index Analyst 2022e 88.6 28.7 23.9 159.2 16.8 N/A Andrew Mitchell 2023e 94.5 38.2 31.8 211.9 12.6 N/A
Edison Insight | 24 June 2021 54 Sector: General retailers SandpiperCI Group (SANDPI) Price: 87.0p Market cap: £87m INVESTMENT SUMMARY Market TISE Sandpiper has been able to leverage its relationships with its franchise partners to open their brands in additional geographies: initially Gibraltar and more recently the Isle of Man. It Share price graph (p) is a dependable operator and upholds the franchisor’s brand values. It owns a high-quality freehold property portfolio, valued at £64m in January 2021, which provides a barrier to entry for the competition. There are some opportunities for in-fill across existing geographies, but we believe that more significant long-term opportunities lie in developing into new territories and an expansion into an adjacent segment such as hospitality. However, this is unlikely to occur in the short term given the ongoing pandemic. The FY21 results demonstrated the group’s resilience: in spite of lockdown-related store closures and significant extra pandemic-related costs such as PPE and social distancing measures, gross revenues were up 6% and trading EBITDA was up by 3%. Company description INDUSTRY OUTLOOK SandpiperCI operates a high-quality portfolio of retail brands covering food, clothing and specialist products. It Our medium-term sales growth of 3.5% for Sandpiper reflects consensus RPI forecasts of c primarily operates franchise stores but 3% and modest space growth, as Sandpiper expands across its existing geographies. also a number of its own food convenience stores. It is the leading Channel Islands retailer and is also present in Gibraltar and the Isle of Man. Y/E Feb Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual N/A N/A N/A 2020 188.5 11.0 4.5 3.56 24.4 30.1 Relative* N/A N/A N/A 2021 200.4 11.3 5.1 4.09 21.3 9.3 * % Relative to local index Analyst 2022e 205.2 11.8 5.3 4.25 20.5 9.6 Sara Welford 2023e 210.4 12.1 5.3 4.27 20.4 8.6
Sector: General industrials Schaltbau Holding (SLT) Price: €38.55 Market cap: €367m INVESTMENT SUMMARY Market Deutsche Börse Schaltbau Holding should benefit from trends towards digitalisation and interconnectivity in its core Rail segment (68% of FY20 revenues), while restoring profitability levels. The ability Share price graph (€) to leverage direct current (DC) switching expertise should provide opportunities in growth markets, such as new energy, e-mobility, the DC industry and smart grids. Schaltbau’s valuation offers re-rating potential now that the company is on the verge of restoring profitability after an extensive restructuring programme.
INDUSTRY OUTLOOK
Q121 results were strong with revenues +4% and EBIT +59%. Schaltbau expects to realise growth of around 5% in the modestly growing Railway market until 2026, driven by the modernisation of Rail, and to significantly improve EBIT margins towards 6–8% in 2026 Company description (2–3% in FY20). Higher growth will come from the Components division with exposure to Schaltbau Holding specialises in high growth markets such as new energy (wind and solar) and e-mobility. Growth in these products for rail infrastructure and rolling stock and also road vehicles segments is estimated at >20% per annum. and other industrial applications. Rail represents 68% of revenues. The geographical spread of revenues in FY20 is Germany 36%, other Europe 47% and rest of the world 17%. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 14.7 14.4 48.3 2019 513.7 45.1 10.5 104.85 36.8 N/A Relative* 14.3 9.4 17.9 2020 502.3 43.1 14.5 146.53 26.3 N/A * % Relative to local index Analyst 2021e 531.0 47.7 22.9 147.31 26.2 N/A Johan van den Hooven 2022e 568.0 56.9 30.7 192.14 20.1 N/A
Edison Insight | 24 June 2021 55 Sector: Financials Secure Trust Bank (STB) Price: 1040.0p Market cap: £194m INVESTMENT SUMMARY Market LSE STB's Q120 trading update reported benign credit conditions with new lending up 7.1% year-on-year and 2.4% quarter-on-quarter. STB is seeing a phased return to pre-pandemic Share price graph (p) lending criteria in the Motor Finance division. We estimate loan growth of 5% and 15% for FY21 and FY22 despite lending still affected by the pandemic. We see impairment dropping to 1.5% by 2022, which should help drive ROE to 11.1%. Its solid good capital base (CET1 14.2) supports management’s strategy of seeking growth opportunities both organically and through possible M&A. Our fair value remains at 2,163p per share.
INDUSTRY OUTLOOK
There is naturally some uncertainty regarding job furlough schemes and other support measures, but we expect the government to take a pragmatic approach to tapering them off. Company description As such, we do not envisage a cliff-edge scenario despite the clear risk to forecasts. We Secure Trust Bank is a believe that STB’s relatively short duration book and proven nimbleness helps it adjust to well-established specialist bank addressing niche markets within lending conditions. We estimate STB’s impairments will drop from 2.3% of loans in FY20 to consumer and commercial banking. 1.5% by 2022 and this along with balance sheet expansion will help drive earnings growth.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (12.1) (1.9) 31.0 2019 165.5 N/A 41.1 180.2 5.8 N/A Relative* (11.9) (5.3) 12.9 2020 166.1 N/A 20.1 85.2 12.2 N/A * % Relative to local index Analyst 2021e 165.7 N/A 27.4 115.2 9.0 N/A Pedro Fonseca 2022e 190.8 N/A 41.5 175.0 5.9 N/A
Sector: Engineering Severfield (SFR) Price: 79.0p Market cap: £244m INVESTMENT SUMMARY Market LSE FY21 results were slightly better than we had anticipated in most respects. Revenue and reported EBIT were 2.5% and 4.8% above our estimates respectively – and a 7% operating Share price graph (p) margin achieved – with slightly lower interest costs and loss from JV/associates slightly lower. Dividends were in line (ie 1.8p final making an unchanged 2.9p for the year as a whole). Year-end net cash was as expected at c £4m and strong cash collection was a feature throughout the year. The underlying UK/Europe order book is stable and enhanced by DAM making £301m in total while the Indian JV equivalent has swollen to a record £140m. Management referred to positive momentum across the group and an expectation of progress in FY22. Our estimates are under review.
INDUSTRY OUTLOOK
Company description The primary strategic aim is to maintain Severfield’s position as the leading UK structural Severfield is a leading UK structural steelwork supplier. The Indian JV targets similar sectors to those served in the UK; steelwork fabricator operating across a broad range of market sectors. An management has valued the Indian construction market at c £100bn pa, with a very low Indian facility undertakes structural penetration of steel structures currently. steelwork projects for the local market and is currently being expanded.
Y/E Dec / Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.0 2.6 11.3 2019 274.9 29.0 24.7 6.66 11.9 13.3 Relative* 0.1 (1.0) (4.1) 2020 327.4 33.2 28.6 7.75 10.2 8.6 * % Relative to local index Analyst 2021e 354.5 29.6 22.9 6.03 13.1 8.7 Toby Thorrington 2022e 365.3 34.6 27.5 7.29 10.8 8.8
Edison Insight | 24 June 2021 56 Sector: General industrials Stern Groep (STRN) Price: €13.30 Market cap: €79m INVESTMENT SUMMARY Market AMS In 2020, Stern restructured its balance sheet and further streamlined operations. This puts it in a good position to cope with the uncertain car market, as was evident in Q1. In 2021, a Share price graph (€) number of opportunities relating to the company’s financial position, as well as its participation in Bovemij and M&A, could start to materialize. We expect profitability to increase in the next few years, driven by the restructured organisation, digitisation efforts, a focus on margin over volume and an improving market environment. The valuation is undemanding, at c 7.0x 2022e P/E.
INDUSTRY OUTLOOK
Automotive retail already had to deal with structural change and COVID-19 has presented another big challenge. After a drop in new car sales in 2020 by 20% to 356,051 in the Company description Netherlands, sector organisations Aumacon and RAI/Bovag expect a rebound of 12–17% in With 61 dealer and Stern Point car 2021. Stern should start to see the effects of optimising its dealer network, focusing on repair locations and revenues of almost €900m, Stern Groep is the third omnichannnel, moving out of unattractive car brands and executing cost controls. largest car retailer group in the Netherlands. The company has more than 1,557 employees.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 0.8 12.2 31.0 2019 876.8 26.4 (1.4) 29.13 45.7 N/A Relative* (1.3) 6.4 2.4 2020 751.1 27.8 0.8 (85.41) N/A N/A * % Relative to local index Analyst 2021e 819.8 18.4 9.7 148.63 8.9 N/A Edwin De Jong 2022e 846.7 21.7 12.8 191.43 6.9 N/A
Sector: General retailers Studio Retail Group (STU) Price: 261.0p Market cap: £227m INVESTMENT SUMMARY Market LSE Studio Retail Group’s Q421 trading update highlighted continued strong trading for the core online retail business, Studio through the end of FY21, buoyed in part by the forced closure Share price graph (p) of competitors on the high street. The y-o-y improvement in both collections and the arrears profile of the credit book is testament to the multi-year investment in customer screening and management of its credit offer given prior fears about the potential negative effects of a more challenging macroeconomic environment. The (completed) disposal of the more challenged Education business completes the multi-year refocusing of the portfolio and leads to SRG now being a pure-play online retailer with an improved growth outlook than previously.
INDUSTRY OUTLOOK
Company description Against a challenging macroeconomic backdrop, Studio is outperforming much of the retail Studio Retail Group is a leading online market through its unique digital-first value proposition, combined with the backing of value retailer with an integrated financial services offer. The growth flexible, and increasingly tailored, responsible consumer credit solutions. strategy is based around three key levers: value, choice and payment options, and management’s medium-term target is to achieve revenue of £1bn. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (10.0) (1.5) 43.4 2019 506.8 45.1 25.6 23.2 11.3 10.1 Relative* (9.9) (5.0) 23.6 2020 434.9 35.0 11.0 12.0 21.8 13.6 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Russell Pointon 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 57 Sector: Financials Supermarket Income REIT (SUPR) Price: 123.5p Market cap: £1001m INVESTMENT SUMMARY Market LSE Since closing its well received, upscaled £150m (£153m including the PrimaryBid offering) equity raise in March SUPR has deployed £63.0m. With a strong pipeline of investment Share price graph (p) opportunities that meet the strict investment criteria, we anticipate further significant investment activity. H121 results, already overtaken by continuing portfolio growth, provided evidence of both the financial benefits of increased scale and the key role of omnichannel stores in supermarket distribution strategies. Rental income increased 71% to £20.4m, fully collected, and EPRA earnings by 116% to £15.5m; EPRA earnings cover of increased DPS rose to 112%. With the net initial yield on directly owned stores tightening from 5.0% to 4.7%, in part reflecting a strengthening tenant covenant, H121 EPRA NTA per share was 104p.
INDUSTRY OUTLOOK Company description Supermarket Income REIT, listed on Supermarket property has a long record of positive total returns underpinned by stable the special funds segment of the LSE, invests in supermarket property, let to income returns in part due to long-leases, a strong occupier covenant, and the non-cyclical leading UK supermarket operators, on nature of grocery retailing. Supermarkets have been net beneficiary of the pandemic which long, RPI-linked leases. The investment objective is to provide an has boosted sales, particularly online and fulfilled by omnichannel stores. attractive level of income, with the potential for capital growth. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 7.9 15.4 13.8 2019 16.9 21.2 9.9 5.0 24.7 17.6 Relative* 8.0 11.4 (1.9) 2020 25.5 38.9 16.8 5.0 24.7 15.3 * % Relative to local index Analyst 2021e 45.8 59.2 40.5 6.2 19.9 19.5 Martyn King 2022e 66.3 61.5 58.3 7.2 17.2 17.2
Sector: Property Target Healthcare REIT (THRL) Price: 113.8p Market cap: £582m INVESTMENT SUMMARY Market LSE Consistent positive returns continued in Q321 with a 0.8% increase in EPRA NAV per share to 109.1p and NAV total return of 2.5% (including DPS paid). Returns are underpinned by Share price graph (p) inflation-indexed rent growth and robust rent collection, with progress on the small number of underperforming homes. With the care home vaccination programme well advanced, COVID cases within Target-owned homes are now negligible; occupancy of the homes has stabilised and strong enquiries are a positive indicator for recovery. The entire £60m (gross) proceeds of the March equity raise have been allocated to board approved acquisitions that are in advanced stages of due diligence, part of which includes the announced acquisitions of a luxury operational care home in Scotland and a land site/forward funding commitment in Buckinghamshire with an aggregate completed value of £33m (including costs).
INDUSTRY OUTLOOK Company description Target Healthcare REIT invests in Care home demand is driven by demographics and care needs with a shortage of quality modern, purpose-built residential care homes in the UK let on long leases to care homes suggesting a strong investment demand in years to come. The pandemic has high-quality care providers. It selects presented a significant near-term challenge to the sector but does not change the assets according to local demographics and intends to pay underlying demographic-driven fundamentals while highlighting its critical role in supporting increasing dividends underpinned by structural growth in demand for care. the NHS and the importance of long-term investment. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (0.4) 0.5 5.0 2019 34.3 N/A 20.1 5.45 20.9 23.3 Relative* (0.2) (3.0) (9.5) 2020 44.3 N/A 23.2 5.27 21.6 23.9 * % Relative to local index Analyst 2021e 49.8 N/A 26.1 5.55 20.5 20.6 Martyn King 2022e 56.4 N/A 33.6 6.57 17.3 16.2
Edison Insight | 24 June 2021 58 Sector: Technology Technicolor (TCH) Price: €3.08 Market cap: €726m INVESTMENT SUMMARY Market Euronext Paris Technicolor’s Q121 figures showed (constant currency) revenue up 3.6% on prior year, buoyed by continued strong demand in Connected Home. The outlook for Technicolor Share price graph (€) Creative Studios (was Production Services) is considerably improved as filming gets underway and projects are greenlit. The animation activities have been consolidated under the Mikros Animation brand. Group FY21 and FY22 earnings guidance is maintained, with margins set to improve after earlier streamlining and ongoing cost control. Following FY20’s financial restructure, the equity proportion of Technicolor’s enterprise value is no longer greatly overshadowed by the debt. With improving cash flow, a revaluation of the equity seems underway.
INDUSTRY OUTLOOK
Company description COVID-19 has highlighted the importance of reliable domestic broadband and high-quality Technicolor is a worldwide technology wi-fi as homes increasingly act as devolved workplaces alongside greater content leader operating in the media and entertainment industry. Its activities are consumption. This is unlikely to change as the global economy reopens. In Technicolor organised in three business segments, Creative Studios, the live content industry continues to re-emerge, while animation demand Production Services, DVD Services and Connected Home. remains strong. Fresh, high-quality content is crucial to reinforce the attractiveness of VoD platforms to subscribers and advertisers in a competitive market. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (1.8) 22.4 (21.3) 2019 3800.0 325.0 (73.0) (492.18) N/A 0.7 Relative* (4.8) 13.7 (40.1) 2020 3006.0 167.0 (43.0) (33.64) N/A N/A * % Relative to local index Analyst 2021e 2933.0 270.0 (3.0) (2.97) N/A 7.0 Fiona Orford-Williams 2022e 3255.0 385.0 117.0 42.67 7.2 2.5
Sector: General industrials Thrace Plastics (PLAT) Price: €6.31 Market cap: €276m INVESTMENT SUMMARY Market Athens Stock Exchange FY20 was an outstanding year for Thrace which benefitted from a sharp increase in demand for personal protective equipment (PPE) arising from the COVID-19 pandemic but also Share price graph (€) delivered a very strong organic increase in underlying profitability in group PBT from continuing operations. Margins improved at all levels in both divisions with Technical Fabrics’ EBIT rising almost fivefold while that for Packaging more than doubled. Further earnings progress was achieved in Q121 at the end of which net debt had reduced to c €6m (€9m including IFRS 16 leases).
INDUSTRY OUTLOOK
Thrace manufactures a wide range of products that are used in a variety of sectors, ranging from construction/infrastructure to food packaging, medical and horticulture primarily in Company description Europe. Management’s high-level financial objective is to pursue profitable growth using two Thrace Plastics is an established primary levers: increased capacity and value capture. international producer of Technical Fabrics (FY19: 72% of net revenues) and Packaging (28%). Each division uses a number of manufacturing processes and produces a wide range of products from polymer materials, serving a diverse range of end-markets. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 6.1 51.3 266.9 2019 327.8 30.6 10.2 12.8 49.3 10.4 Relative* 5.5 41.1 168.4 2020 339.7 76.5 56.1 93.1 6.8 3.2 * % Relative to local index Analyst 2021e 387.5 100.1 76.5 132.5 4.8 3.0 Toby Thorrington 2022e 342.4 57.8 32.9 56.2 11.2 4.3
Edison Insight | 24 June 2021 59 Sector: Media Tinexta (TNXT) Price: €30.98 Market cap: €1462m INVESTMENT SUMMARY Market Borsa Italiana STAR Tinexta’s Q121 results highlighted strong growth in organic revenue (+17.6% y-o-y), profitability (adjusted EBITDA +33.5%) and free cash flow generation (+30%) in what is Share price graph (€) typically a small quarter from a financial perspective. The recently acquired Cyber Security businesses are performing in line with management’s expectations, which is reassuring. Management's guidance for FY21 was re-iterated.
INDUSTRY OUTLOOK
Tinexta is exposed to favourable growth trends including the transition to a digital world and the requirement for enhanced online security. Starting from a purely domestic Italian focus, the company is exploiting these trends internationally. In particular, given recent regulatory changes, in Digital Trust the group is leveraging its Italian expertise to expand on an Company description EU-wide basis with a unified legal base across the region. At the same time, Tinexta is likely Tinexta has four divisions: Digital to make acquisitions in Italy and Europe that will further expand its addressable markets Trust, solutions to increase trust in digital transactions; Credit Information and seek cross-selling opportunities between the business units. & Management, services to manage credit; Innovation & Marketing Services, consulting services to help clients develop their businesses; and Cybersecurity. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 26.9 37.7 161.7 2019 258.7 71.3 53.5 80.3 38.6 26.5 Relative* 24.7 31.6 100.8 2020 269.0 77.9 58.6 86.7 35.7 17.5 * % Relative to local index Analyst 2021e 370.2 96.2 73.5 110.6 28.0 23.3 Russell Pointon 2022e 411.7 110.6 86.9 130.8 23.7 18.5
Sector: Technology Trackwise Designs (TWD) Price: 230.0p Market cap: £65m INVESTMENT SUMMARY Market AIM Trackwise’s FY20 results show a resilient response to the pandemic with progress made against all aspects of the group’s strategy. Revenues doubled year-on-year to £6.1m, Share price graph (p) reflecting the acquisition of Stevenage Circuits (SCL). However, concerns about the long-term economic impact of the pandemic caused a slow-down in new orders. After adjusting for exceptional costs and share-based payments, the group moved from an operating profit of £0.2m in FY19 to a £0.2m operating loss.
INDUSTRY OUTLOOK
Part of the funds raised in March 2020 were used to acquire SCL, which has become the group’s centre for advanced PCB manufacture, freeing the Tewkesbury site for IHT production. Part of the proceeds raised in December are being used during FY21 for a new Company description site in Stonehouse, Gloucestershire, which will also be dedicated to IHT production. This Trackwise Designs is a UK expansion is required to accommodate the requirements of a UK electric vehicle OEM. This manufacturer of specialist products using printed circuit technology. These OEM has recently extended the agreement from three to four years, increasing the total include a lightweight replacement for value by £16m to up to £54m. Noting that the volume ramp-up under this agreement has conventional wiring harnesses known as IHT and RF antennae. In FY19, been delayed from FY21 to H122, we place our estimates under review. 64% of revenues related to exports.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (5.2) (11.5) 156.7 2019 2.9 0.5 0.1 0.8 287.5 N/A Relative* (5.0) (14.6) 121.3 2020 6.1 0.8 (0.4) 1.4 164.3 N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 24 June 2021 60 Sector: Food & drink Treatt (TET) Price: 1225.0p Market cap: £731m INVESTMENT SUMMARY Market LSE Treatt once again delivered a strong performance in the first half of FY21, with good momentum across multiple categories contributing to growth. Operating margins have Share price graph (p) benefited from the improved product mix as Treatt continues to move up the value chain and partners with its customers to develop new products. Its technical expertise is being utilised across a growing range of applications, which has led to revenue growth and margin expansion. The UK facility opened in April 2021 with commissioning of the machinery due later in the year. The outlook for FY21 is optimistic, with the board raising FY expectations with the H1 results: adjusted PBT is now expected to be 'at least £20m'.
INDUSTRY OUTLOOK
Treatt has migrated its business from that of a pure supplier to the food and beverage Company description industries to being a valued partner in the development of new ingredients. Citrus, tea, fruit Treatt provides innovative ingredient and vegetable flavours and health & wellness (mainly sugar reduction) are core areas of solutions from its manufacturing bases in Europe and North America, focus, with the latter undergoing a structural growth trend. principally for the flavours and fragrance industries and multinational consumer goods companies, particularly in the beverage sector.
Y/E Sep Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.9 20.7 149.0 2019 112.7 15.8 14.0 19.0 64.5 35.2 Relative* 3.1 16.5 114.6 2020 109.0 17.9 15.8 21.3 57.5 46.7 * % Relative to local index Analyst 2021e 127.5 25.6 21.7 29.5 41.5 48.1 Sara Welford 2022e 135.2 30.2 23.6 32.0 38.3 27.8
Sector: Property Triple Point Social Housing REIT (SOHO) Price: 105.4p Market cap: £425m INVESTMENT SUMMARY Market LSE Unaudited IFRS (and EPRA) NAV per share was 106.55p at end-Q121 (end-FY20: 106.42p) and including DPS paid, the quarterly NAV total return was 1.3%, continuing the Share price graph (p) consistently positive trend since IPO. A Q121 DPS of 1.3p was declared and SOHO is targeting aggregate FY21 DPS of 5.2p, up 0.4% in line with the annual February increase in the UK CPI. As SOHO continues to deploy the £55m (gross) proceeds from October’s equity issue, along with increased debt funding, we expect further portfolio growth, bringing much-needed new supply of supported housing to market. Combined with rent indexation and development completions we expect another year of strong earnings growth in FY21, supporting a continuation of the progressive dividend policy, fully covered by adjusted earnings.
INDUSTRY OUTLOOK Company description Triple Point Social Housing REIT Private capital is crucial in meeting the current and future needs for care based social (SOHO) invests in primarily newly built and newly renovated social housing housing which is widely recognised to improve lives in a cost-effective manner compared assets in the UK, with a particular with the alternatives of residential care or hospitals. focus on supported housing. SOHO aims to provide a stable, long-term inflation-linked income with the potential for capital growth. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.4 3.8 9.2 2019 21.1 15.1 11.9 3.39 31.1 22.7 Relative* 0.5 0.2 (5.9) 2020 28.9 22.3 16.6 4.61 22.9 15.5 * % Relative to local index Analyst 2021e 33.9 26.9 20.6 5.11 20.6 13.0 Martyn King 2022e 36.1 28.9 22.4 5.57 18.9 14.5
Edison Insight | 24 June 2021 61 Sector: Technology TXT e-solutions (TXT) Price: €7.81 Market cap: €102m INVESTMENT SUMMARY Market Borsa Italiana STAR TXT e-solutions reported strong revenue and profit growth in Q121, reflecting the benefit of recent acquisitions and good cost control. Since the end of Q1, the company has signed Share price graph (€) promising contracts in both divisions, including the first contract for TXT Working Capital Solutions. With net cash of €10.8m and treasury shares worth at least €9m, management indicated it is considering further M&A while continuing to drive organic growth, and has since invested €0.5m in ReVersal SpA, a small fintech start-up.
INDUSTRY OUTLOOK
In the aerospace and aviation division, the rapid pace of innovation combined with increasing regulation drives demand for TXT's software and services. In the fintech division, TXT has expanded from providing software testing services to Italian banks to providing a Company description range of software and services (eg risk management, digital payments, supply chain finance TXT e-solutions provides IT, consulting solutions, credit management software) to an international customer base. and R&D services to aerospace, aviation, automotive, banking and finance customers.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 2.2 14.0 0.0 2019 59.1 7.0 7.6 45.551 17.1 N/A Relative* 0.5 9.0 (23.3) 2020 68.8 8.6 7.1 46.964 16.6 N/A * % Relative to local index Analyst 2021e 86.7 10.9 8.7 53.492 14.6 N/A Katherine Thompson 2022e 92.4 12.2 10.0 61.264 12.7 N/A
Sector: Construction & blding mat Tyman (TYMN) Price: 457.5p Market cap: £898m INVESTMENT SUMMARY Market LSE A strong end to FY20 has continued with all three divisions performing ahead of management’s expectations in the first four months of FY21. Moreover, the company has Share price graph (p) become more optimistic about the outlook for the remainder of the year. Following raised FY21 guidance we increased our expected contributions from all three divisions and for all three estimate years resulting in an FY21 EPS uplift of c 11%, followed by +9% in each of the following two years. A subsequent capital markets event (20 May) expanded upon the company’s ‘Focus, Define, Grow’ value creation strategy through further organic development of strong regional market positions (eg through product development, customer service and channel expansion) and potentially acquisitions.
INDUSTRY OUTLOOK
Company description Prior to the COVID-19 outbreak, leading North American and European markets were Tyman’s product portfolio substantially expected to grow modestly and the new-build sector has generally been firmer than RMI addresses the residential RMI and building markets with increasing spend which has been more patchy. commercial sector exposure following acquisitions. It manufactures and sources window and door hardware and seals, reporting in three divisions.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (5.4) 20.4 136.8 2019 613.7 100.8 71.0 27.3 16.8 8.0 Relative* (5.3) 16.2 104.1 2020 572.8 94.9 68.4 27.1 16.9 8.1 * % Relative to local index Analyst 2021e 620.0 104.7 80.1 31.5 14.5 9.4 Toby Thorrington 2022e 635.8 108.9 85.1 33.0 13.9 8.0
Edison Insight | 24 June 2021 62 Sector: General industrials VivoPower International (VVPR) Price: US$6.98 Market cap: US$118m INVESTMENT SUMMARY Market NASDAQ The move into electric vehicles (EVs) through the acquisition of Tembo is a step-change for VivoPower International. It brings significant growth potential in a niche market while the Share price graph (US$) group’s scale and presence has already delivered a transformational deal for the business. Gaining market traction provides the potential to scale Tembo to being a truly global specialist EV business. In addition, Vivo provides additional wrap around services from electrical infrastructure to solar development.
INDUSTRY OUTLOOK
The move to a low carbon environment is accelerating the drive towards electrification of the economy. In transportation this involves a full chain from generation (solar, wind etc), associated infrastructure (grid robustness and charging), electric vehicles as internal Company description combustion engines are phased out and storage requirements (battery management). The VivoPower International’s strategy is to speed of regulation is acceleration as are the commitments from companies including the provide sustainable energy solutions on an international scale. Key activities mining sector, a key opportunity for Vivo. at present are electric vehicles, critical power and solar development. Its primary operations are in Australia, Europe and North America.
Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 1.0 (22.0) 409.5 2019 39.0 (4.0) (8.6) (63.80) N/A N/A Relative* 0.1 (26.7) 281.0 2020 48.7 3.9 (1.0) (12.00) N/A N/A * % Relative to local index Analyst 2021e 41.6 4.9 0.1 0.41 1702.4 N/A David Larkam 2022e 52.3 5.3 (0.9) (4.06) N/A 19.9
Sector: Technology WANdisco (WAND) Price: 384.5p Market cap: £202m INVESTMENT SUMMARY Market AIM Following the integration of LiveData with leading cloud vendors (Microsoft and AWS) and the recent signing of major partnership deals, all the pieces are now in place for a big Share price graph (p) acceleration in growth in FY21. WANdisco expects commercialisation of these deals to begin shortly and, predicated on migrating over 130PB of data in FY21, is guiding to sales of ‘at least $35m’. We expect sales to rise to $60m in FY22.
INDUSTRY OUTLOOK
The rapid adoption of cloud computing coupled with WANdisco’s proprietary technology creates a significant opportunity for both long term growth and high margins in our view. The company has set out its ambition to generate annual revenue of at least $100m in the next three to five years from a combination of 1) data migration; 2) hybrid cloud; and 3) Company description multi-cloud. Our analysis suggests that the Microsoft relationship alone could generate more WANdisco’s proprietary replication than $80m in annual revenues by 2023 with the data migration element alone presenting a technology enables its customers to solve critical data management $1.4bn opportunity in the long term. challenges created by the shift to cloud computing. It has established partner relationships with leading players in the cloud ecosystem including Microsoft and AWS. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (7.4) (23.1) (41.7) 2019 16.2 (11.7) (18.4) (38.8) N/A N/A Relative* (7.2) (25.8) (49.7) 2020 10.5 (22.2) (30.4) (57.3) N/A N/A * % Relative to local index Analyst 2021e 37.0 (2.4) (9.4) (16.9) N/A N/A Dan Gardiner 2022e 60.0 15.3 8.4 14.2 38.1 20.4
Edison Insight | 24 June 2021 63 Sector: Mining Wheaton Precious Metals (WPM) Price: C$54.30 Market cap: C$24439m INVESTMENT SUMMARY Market TSX Wheaton Precious Metals (WPM) reported record revenue in Q121, resulting in its repaying all outstanding debt and approving a third successive increase in its quarterly dividend to Share price graph (C$) 14c/share. Ounces produced but not yet delivered fell to more normal levels and all of its partners' mines have now returned to normal (or near normal) operating conditions. Since its Q1 results, it has also published a sustainability report for 2020 highlighting its strong ESG credentials.
INDUSTRY OUTLOOK
Under normal circumstances, we believe that WPM could easily justify a valuation of US$62.54 (or C$76.20) per share, in FY23. With precious metals returning to favour however, we believe that a valuation as high as US$84.81 (C$107.16) is achievable. In the Company description meantime, it remains cheaper than the average valuations of its peers in at least 72% of Wheaton Precious Metals is the cases. This follows the settlement reached between WPM and the CRA in December 2018 pre-eminent ostensibly precious metals streaming company, with 32 whereby income from WPM’s international subsidiaries will remain exempt from Canadian high-quality precious metals streaming tax. and early deposit agreements relating to assets in Mexico, Peru, Canada, Brazil, Chile, US, Argentina, Sweden, Greece, Portugal and Colombia. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (5.2) 10.1 1.7 2019 861.3 548.3 242.7 54.0 82.6 36.3 Relative* (7.6) 3.7 (21.3) 2020 1096.2 763.8 503.2 112.0 39.8 25.5 * % Relative to local index Analyst 2021e 1405.4 1002.4 705.3 157.0 28.4 19.6 Charles Gibson 2022e 1631.5 1239.7 933.5 207.0 21.6 16.2
Sector: Technology XP Power (XPP) Price: 5300.0p Market cap: £1041m INVESTMENT SUMMARY Market LSE XP reported another robust quarter for order intake (+7% y-o-y, +38% q-o-q in constant currency), strengthening the backlog for the coming quarters. Demand from the Share price graph (p) semiconductor manufacturing sector remains strong and demand from the industrial technology sector has started to rebound, more than compensating for the moderation in orders from the healthcare sector. Management reiterates its outlook for underlying revenue growth in FY21 and we maintain our forecasts. On 4 May, Oskar Zahn was appointed to the role of CFO.
INDUSTRY OUTLOOK
XP supplies four end-markets: healthcare, industrial electronics, semiconductors and technology, across Europe, North America and Asia. The industrial electronics segment is Company description relatively fragmented, but the company sees demand across various applications. The XP Power is a developer and designer healthcare business continues to gain market share, with corporate approvals from the of power control solutions with production facilities in China, Vietnam major suppliers in place. The semiconductor segment is the most cyclical, tracking the and the United States, and design, capex requirements of semiconductor manufacturers. service and sales teams across Europe, the United States and Asia.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 8.3 6.6 48.9 2019 199.9 44.5 32.3 141.4 37.5 N/A Relative* 8.4 2.9 28.3 2020 233.3 56.8 44.3 198.4 26.7 N/A * % Relative to local index Analyst 2021e 227.8 54.6 41.5 171.4 30.9 N/A Katherine Thompson 2022e 237.8 58.4 44.9 185.3 28.6 N/A
Edison Insight | 24 June 2021 64 Sector: Media YouGov (YOU) Price: 1180.0p Market cap: £1307m INVESTMENT SUMMARY Market AIM YouGov's interim statement indicated that a strong sales performance was giving good momentum into H221 and through to FY22, with a greater number of larger, strategic Share price graph (p) contracts now on the books. April’s acquisition of Lean App added another facet to the group’s commercial offering, giving (consented, permissioned) access to consumer data on financial transactions. The purchase is on a three-year earn-out, with the founders staying with the group. YouGov remains valued towards the top of its peer set, reflecting its strong market positioning, attractive cash generation and cash-positive balance sheet.
INDUSTRY OUTLOOK
YouGov’s business has weathered the ongoing impact of the COVID-19 pandemic well, with agencies holding up and the tech sector continuing to grow. The increasing emphasis on Company description data privacy and the forthcoming changes to third-party cookie usage are highlighting the YouGov is an international research benefits and value inherent in permissioned, first-party data. YouGov's developments, data and analytics group. Its data-led offering supports and improves a wide particularly those such as YouGov Safe, sit well in this shifting environment. spectrum of marketing activities of a customer base including media owners, brands and media agencies. It works with some of the world’s most recognised brands. Y/E Jul Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 7.3 21.0 48.2 2019 136.5 31.7 20.4 13.8 85.5 32.6 Relative* 7.4 16.8 27.8 2020 152.4 39.2 24.7 15.7 75.2 32.8 * % Relative to local index Analyst 2021e 170.0 47.9 30.6 17.4 67.8 27.8 Fiona Orford-Williams 2022e 185.0 54.3 37.0 21.3 55.4 24.1
Edison Insight | 24 June 2021 65
Edison dividend list
Company name FY0 period end Currency DPS FY0 DPS FY1 DPS FY2 4imprint Group 2020/12 USD 0.00 25.00 35.00 Appreciate Group 2020/03 GBP 0.00 1.20 1.50 Avon Rubber 2020/09 USD 34.50 44.90 53.90 Canacol Energy 2020/12 USD 0.21 0.21 Cenkos Securities 2020/12 GBP 3.50 Centaur Media 2020/12 GBP 0.50 1.00 1.00 Cohort 2020/04 GBP 10.10 11.10 12.20 discoverIE Group 2021/03 GBP 10.20 10.70 11.00 Ebiquity 2020/12 GBP 0.00 0.50 1.25 Endeavour Mining Corp 2020/12 USD 37.00 50.00 60.00 Epwin Group 2020/12 GBP 1.00 2.50 3.40 Esker 2020/12 EUR 35.00 40.00 45.00 Games Workshop Group 2020/05 GBP 145.00 235.00 250.00 Gamesys Group 2020/12 GBP 40.00 GB Group 2021/03 GBP 6.40 3.50 3.60 GCP Student Living 2020/06 GBP 6.20 5.70 5.70 Genuit Group 2020/12 GBP 4.80 9.00 10.00 Greggs 2020/12 GBP 0.00 20.00 39.10 Hellenic Petroleum 2020/12 EUR 10.00 21.30 29.80 Impact Healthcare REIT 2020/12 GBP 6.30 6.40 6.50 Jersey Electricity 2020/09 GBP 16.50 17.30 18.20 La Doria 2020/12 EUR 50.00 41.00 44.00 Lookers 2019/12 GBP 1.48 Marshall Motor Holdings 2020/12 GBP 0.00 6.00 6.60 Norcros 2020/03 GBP 3.10 5.50 8.00 Numis Corporation 2020/09 GBP 12.00 12.00 Ocean Wilsons Holdings 2020/12 USD 70.00 70.00 70.00 OTC Markets Group 2020/12 USD 125.00 125.00 135.00 Palace Capital 2021/03 GBP 10.50 12.00 14.00 Pan African Resources 2020/06 USD 0.84 1.10 1.09 Primary Health Properties 2020/12 GBP 5.90 6.20 6.40 ProCredit 2020/12 EUR 53.00 30.50 43.30 Record 2021/03 GBP 2.30 2.30 Secure Trust Bank 2020/12 GBP 44.00 46.10 70.00 Severfield 2020/03 GBP 2.90 2.90 3.00 Supermarket Income REIT 2020/06 GBP 5.80 5.86 5.98 Target Healthcare REIT 2020/06 GBP 6.68 6.72 6.80 Thrace Plastics 2020/12 EUR 4.60 4.60 4.60 Treatt 2020/09 GBP 6.00 8.50 9.20 Triple Point Social Housing REIT 2020/12 GBP 5.18 5.20 5.49 Tyman 2020/12 GBP 4.00 10.00 12.00 Wheaton Precious Metals 2020/12 USD 42.00 62.00 79.00 YouGov 2020/07 GBP 5.00 5.50 6.50
Edison Insight | 24 June 2021 66
Company Sector Most recent note Date published
1Spatial Software & comp services Flash 23/06/21 4iG IT services Flash 21/06/21 4imprint Group Media Update 18/05/21 AAC Clyde Space Aerospace & defence Update 01/06/21 Aberdeen Asian Income Fund Investment companies Investment company review 20/04/21 Aberdeen Diversified Inc & Growth Trust Investment companies Investment company review 18/12/20 Aberdeen Latin American Income Fund Investment companies Investment company review 23/02/21 Aberdeen New Thai Investment Trust Investment companies Investment company review 29/01/21 Aberdeen Standard Equity Income Trust Investment companies Investment company review 07/02/19 Accsys Technologies General industrials Update 14/10/19 Acorn Income Fund Investment companies Investment company flash 18/05/21 Alkane Resources Metals & mining Update 08/12/20 Allied Minds Investment companies Update 09/04/21 Alphamin Resources Metals & mining Update 17/05/21 Appreciate Group Financial services Update 05/05/21 ArborGen Basic materials Update 23/06/21 Arcane Crypto TMT Initiation 03/06/21 Aspire Global Travel & leisure Update 06/05/21 Atlantis Japan Growth Fund Investment companies Investment company review 11/01/21 Attica Bank Banks Update 18/06/20 Auriant Mining Metals & mining Update 11/06/21 Avon Rubber Aerospace & defence Update 27/05/21 Axiom European Financial Debt Fund Investment companies Initiation 13/04/21 Baillie Gifford China Growth Trust Investment companies Investment company review 04/05/21 Baker Steel Resources Trust Investment companies Investment company review 21/01/21 BayWa Consumer staples Update 19/01/21 BB Biotech Investment companies Investment company review 01/03/21 bet-at-home Travel & leisure Update 06/05/21 BioPharma Credit Investment companies Investment company review 01/04/21 Biotech Growth Trust (The) Investment companies Investment company review 09/03/21 BlackRock Greater Europe Inv. Trust Investment companies Investment company review 16/03/21 BlackRock Latin American Inv. Trust Investment companies Investment company review 27/04/21 BluGlass Tech hardware & equipment Initiation 09/06/21 Boku Software & comp services Outlook 22/03/21 Borussia Dortmund Travel & leisure Update 01/06/21 Brooge Energy Oil & gas Update 12/05/21 Brunner Investment Trust (The) Investment companies Investment company review 10/05/21 Canacol Energy Oil & gas Update 09/03/21 Canadian General Investments Investment companies Investment company review 17/05/21 Carr’s Group Food & drink Update 21/04/21 Cenkos Securities Financial services Update 12/04/21 Centaur Media Media Update 17/03/21 CentralNic Group Software & comp services Flash 02/06/21 Checkit Software & comp services Update 13/05/21 China Water Affairs Group Utilities Outlook 23/07/20 Civitas Social Housing Real estate Update 19/05/21 Claranova Software & comp services Update 13/05/21 Cliq Digital Media Update 28/04/21 Codere Travel & leisure Update 18/11/19 Cohort Aerospace & Defence Update 26/05/21 Coro Energy Oil & gas Flash 03/04/20 CREALOGIX Group Software & comp services Outlook 22/09/20 Custodian REIT Property Outlook 23/06/21 CVC Credit Partners European Opps Investment companies Investment company review 14/01/21 Datatec IT services Flash 02/06/21 Dentsu Group Media Update 18/05/21
Edison Insight | 24 June 2021 67
Company Sector Most recent note Date published
Deutsche Beteiligungs Investment companies Investment company review 21/05/21 discoverIE Group Electronics & electrical equipment Update 09/06/21 Diverse Income Trust (The) Investment companies Investment company review 29/04/21 Doctor Care Anywhere Group Healthcare equipment & services Update 29/04/21 Draper Esprit Listed venture capital Update 22/06/21 Ebiquity Media Update 26/03/21 EJF Investments Investment companies Flash 27/04/20 Electra Private Equity Investment companies Update 25/05/21 EMIS Group Software & comp services Update 22/03/21 EML Payments Software & comp services Update 14/06/21 Endeavour Mining Metals & mining Update 14/06/21 Epwin Group Industrials Update 15/06/21 EQS Group Media Update 16/06/21 Esker Technology Update 16/04/21 European Assets Trust Investment companies Investment company review 25/02/21 European Investment Trust (The) Investment companies Investment company review 19/06/19 Evolva Food & beverages Update 03/03/21 Expert System Technology Update 01/04/21 Fidelity Asian Values Investment trusts Investment company review 03/02/21 Fidelity China Special Situations Investment companies Investment company review 01/06/21 Fidelity European Trust Investment companies Investment company review 26/04/21 Fidelity Japan Trust Investment companies Investment company review 03/03/21 Fidelity Special Values Investment companies Investment company review 09/02/21 Filtronic Tech hardware & equipment Update 17/06/21 FinLab Investment companies Initiation 27/08/19 Finsbury Growth & Income Trust Investment companies Investment company review 07/06/21 Foresight Solar Fund Investment companies Initiation 18/02/21 Forward Industries Consumer discretionary Initiation 02/11/20 Fundsmith Emerging Equities Trust Investment companies Initiation 29/01/21 Games Workshop Group Consumer goods Update 20/05/21 Gamesys Group Travel & leisure Update 09/03/21 GB Group Technology Update 15/06/21 GCP Student Living Real estate investment trusts Outlook 05/10/20 Gemfields Group Metals & mining Update 29/04/21 Genesis Emerging Markets Fund Investment companies Investment company review 07/06/20 Genuit Group Building & construction Update 28/05/21 Georgia Capital Investment companies Investment company review 05/03/21 Greggs Food & drink Update 11/05/21 Gresham House Strategic Investment companies Investment company review 08/10/20 Hansa Investment Company Investment companies Investment company review 06/05/21 HarbourVest Global Private Equity Investment companies Investment company review 29/09/20 HBM Healthcare Investments Investment companies Investment company review 03/06/21 Hellenic Petroleum Oil & gas Update 02/06/21 Henderson Far East Income Investment companies Investment company review 03/12/20 Henderson International Income Trust Investment trusts Investment company review 01/02/21 Henderson Opportunities Trust Investment trusts Investment company review 24/06/21 HgCapital Trust Investment companies Investment company review 09/06/21 Hurricane Energy Oil & gas Update 18/08/20 ICG-Longbow SSUP Investment companies Investment company review 08/01/20 Impact Healthcare REIT Real estate Update 01/04/21 Invesco Asia Trust Investment companies Investment company review 02/06/21 IQE Tech hardware & equipment Update 25/03/21 Jersey Electricity Industrials Outlook 03/06/21 John Laing Group Investment companies Update 10/03/21 JPMorgan Global Growth & Income Investment companies Investment company review 06/04/21 Jupiter UK Growth Investment Trust Investment trusts Investment company review 13/05/19
Edison Insight | 24 June 2021 68
Company Sector Most recent note Date published
Kcell Joint Stock Company Telecoms Flash 24/02/21 KEFI Gold and Copper Mining Outlook 30/09/20 Kendrion Industrial engineering Update 10/05/21 Keywords Studios Software & comp services Update 15/06/21 Kopy Goldfields Metals & mining Update 01/04/21 La Doria Food & drink Outlook 27/05/21 Lepidico Metals & mining Update 18/06/21 Lookers General retailers Update 24/08/20 Lowland Investment Company Investment companies Investment company review 09/04/21 LXi REIT Real estate Update 07/06/21 Marble Point Loan Financing Investment companies Outlook 23/11/20 Marshall Motor Holdings Automotive retailers Update 20/05/21 Martin Currie Global Portfolio Trust Investment companies Investment company review 10/06/21 Medserv Industrial support services Flash 12/04/21 Merchants Trust (The) Investment companies Investment company review 18/03/21 Mercia Asset Management Investment companies Outlook 02/03/21 Mirriad Advertising Media Update 13/05/21 Monarch Gold Metals & mining Update 19/05/21 Monarch Mining Corporation Metals & mining Update 15/06/21 Mondo TV Media Outlook 09/06/21 Murray Income Trust Investment companies Investment company review 18/05/21 Murray International Trust Investment companies Investment company review 25/03/21 Mynaric Technology Initiation 30/10/20 Mytilineos General industrials Flash 10/02/21 Nanoco Group Tech hardware & equipment Flash 20/05/21 NB Private Equity Partners Investment companies Investment company review 22/06/21 Newmont Corporation Metals & mining Update 14/05/21 Norcros Construction & materials Update 19/04/21 Numis Corporation Financial services Outlook 13/05/21 Ocean Wilsons Holdings Investment companies Outlook 21/06/21 OPAP Travel & leisure Outlook 15/06/21 OPG Power Ventures Utilities Update 22/06/21 Osirium Technologies Software & comp services Update 11/06/21 OTC Markets Group Financial services Update 11/05/21 Palace Capital Real estate Update 17/06/21 Pan African Resources Metals & mining Update 03/03/21 paragon General industrials Update 27/11/19 Phoenix Spree Deutschland Real estate Update 15/06/21 Picton Property Income Property Outlook 23/06/21 PIERER Mobility Automobiles & parts Update 15/02/21 PowerHouse Energy Group Alternative energy Flash 15/07/20 Premier Miton Global Renewables Trust Investment companies Initiation 05/02/21 Primary Health Properties Property Update 13/05/21 Princess Private Equity Holding Investment companies Investment company update 24/06/21 ProCredit Holding Banks Update 20/05/21 Quadrise Fuels International Alternative energy Update 30/03/21 Raven Property Group Property Update 19/03/21 Record Financials Update 23/06/21 Regional REIT Real estate Update 20/05/21 Renergen Oil & gas Update 30/01/20 Renewi Industrial support services Update 17/03/21 Riber Tech hardware & equipment Update 11/05/21 Riverstone Credit Opportunities Income Investment companies Initiation 11/03/21 Rock Tech Lithium Metals & mining Update 18/12/20 S&U Financials Update 24/05/21 SandpiperCI Group Retail Update 21/05/21
Edison Insight | 24 June 2021 69
Company Sector Most recent note Date published
Schaltbau Holding Industrial engineering Update 10/05/21 S Immo Real estate Outlook 16/06/21 SDX Energy Oil & gas Update 21/12/20 Secure Trust Bank Financials Flash 17/05/21 Securities Trust of Scotland Investment companies Initiation 02/12/20 Severfield Construction & materials Update 27/04/21 Silver One Resources Metals & mining Initiation 28/08/20 Standard Life Private Equity Trust Investment companies Investment company review 24/02/21 Standard Life UK Smaller Cos Trust Investment companies Investment company review 26/04/21 Stern Groep Automotive retail Update 12/05/21 Studio Retail Group Retail Flash 20/04/21 Supermarket Income REIT Property Update 24/03/21 Target Healthcare REIT Property Outlook 07/05/21 Technicolor Media Update 14/05/21 Templeton Emerging Markets Inv Trust Investment companies Investment company review 28/01/21 Tetragon Financial Group Investment companies Investment company review 27/04/21 The Bankers Investment Trust Investment trusts Investment company review 31/07/20 The Law Debenture Corporation Investment trusts Investment company review 26/02/21 The MISSION Group Media Update 20/01/21 The Scottish Investment Trust Investment trusts Investment company review 23/03/21 Thin Film Electronics Technology Update 01/06/21 Thrace Plastics General industrials Update 10/06/21 Tinexta Professional services Update 13/05/21 Town Centre Securities Real estate Outlook 26/05/21 Trackwise Designs Tech hardware & equipment Update 25/01/21 TR European Growth Trust Investment trusts Investment company review 22/03/21 Treatt Basic industries Outlook 18/05/21 Triple Point Social Housing REIT Real estate Update 18/05/21 Tungsten Corporation e-invoicer & invoice financier Outlook 11/02/21 TXT e-solutions Technology Update 18/05/21 Tyman Construction & materials Update 12/05/21 UIL Investment companies Investment company review 22/04/21 Utilico Emerging Markets Trust Investment companies Investment company review 24/03/21 VEF Investment companies Update 10/06/21 Vietnam Enterprise Investments Investment companies Investment company review 22/01/21 VietNam Holding Investment companies Investment company review 15/12/20 VinaCapital Vietnam Opportunity Fund Investment companies Investment company review 18/12/20 VivoPower International General industrials Update 22/06/21 Volta Finance Investment companies Investment company review 22/01/21 WANdisco Technology Update 06/05/21 Wheaton Precious Metals Metals & mining Update 21/05/21 Witan Investment Trust Investment companies Investment company review 11/03/21 Worldwide Healthcare Trust Investment companies Investment company review 05/01/21 XP Power Electronic & electrical equipment Update 13/04/21 YouGov Media Update 25/03/21
Edison Insight | 24 June 2021 70
General disclaimer and copyright This report has been prepared and issued by Edison. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services. Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note. No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors. Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest. Copyright: Copyright 2021 Edison Investment Research Limited (Edison).
Australia Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.
New Zealand The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.
United Kingdom This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document. This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.
United States Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.
Frankfurt +49 (0)69 78 8076960 London +44 (0)20 3077 5700 New York +1 646 653 7026 Sydney +61 (0)2 8249 8342 Schumannstrasse 34b 280 High Holborn 1185 Avenue of the Americas, Level 4, Office 1205, 95 Pi St, 60325 Frankfurt London, WC1V 7EE 3rd Floor, New York, NY 10036 Sydney NSW 2000 Germany United Kingdom United States of America Australia
Edison Investment Research Limited is registered in England. Registered office: 280 High Holborn, London, WC1V 7EE. Company number 4794244. www.edisongroup.com